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I don't know why an employee wouldn't want to use up the prior year's first but the question is asked if an ee incurrs a claim in this plan year but the incurred date is still within the extension, can they opt to choose which plan year to make the claim in or are they forced to claim for the previous year while they still have money left there?

Indeed. I ended up giving an answer similar LRDG's.

It does as a matter of fact. I hadn't seen them until now. Thanks.

If an EE makes an error in specifying the amount elected, when do such errors become permanent? In this case, an employee has realized from the first paycheck that the election is $50 per pay period too large. The claim is that the ee filled out two enrollment forms but sent in the wrong one.

In my EBIA manual, it tells me what I should include in the plan document. However, is it that general that I can simply follw those instructions and generate a plan document without any sort of template? Are there more detailed instructions/templates/examples for plan documents out there?

If the employer contributes to an employee's DCAP, can the employee elect the full $5000 out of their own check and then add the employer's contribution on top of that? Similarly, if the employer limits the MFSA election to say, $3000, and also contributes to an employee's MFSA election, can the $3000 limit be exceeded by the total election?

I have a situation in which an FSA election is funded exclusively by employer contribution. The employee has terminated a month or so before end of the plan year. The employee claims that they can continue to incur expenses because of the grace period. My understanding is that unless the employee goes COBRA, they cannot be reimbursed for expenses beyond the termination date whether or not a grace period has been provided for in the plan. Of course if they had terminated after the end of the plan year but during the grace period, they could still incur reimbursible expenses. What is the correct answer? Can the employee be reimbursed for expenses after the termination date in this case?

Thanks for your help guys. I think I have found the answer (which is "no") here out of the EBIA manual (hopefully it's not a violation to post snippets of it?)... Spouse’s or Dependent’s COBRA Coverage Under Plan of Spouse’s or Dependent’s Employer Though the issue is not entirely clear, a spouse’s or dependent’s COBRA continuation premium under a plan of the spouse’s or dependent’s employer likely should not be paid using pre-tax salary reductions under a cafeteria plan maintained by the participant’s employer. While the 2007 proposed Cafeteria Plans regulations and their preamble specifically allow pre-tax reimbursement of COBRA premiums for an employee’s COBRA coverage under a different employer’s plan, no mention is made of reimbursing COBRA premiums for a spouse’s or dependent’s coverage under a plan of another employer and no other formal guidance indicates whether a cafeteria plan can pay or reimburse such premiums.310 The literal language of the 2007 proposed regulations may reflect the view that reimbursing such premiums would constitute impermissible participation in the cafeteria plan by the spouse or dependent.311 Moreover, such coverage arguably would not be eligible for pre-tax treatment because it is not coverage belonging to the employee or coverage under the health plan of the employer sponsoring the cafeteria plan.312 More guidance on this issue would be welcome. Footnotes: 310 Prop. Treas. Reg. §§ 1.125-1(a)(3)© and 1.125-1(l)(2), Example. 311 Under Prop. Treas. Reg. § 1.125-1(g)(4), a spouse or dependent “may not be given the opportunity to elect or purchase benefits offered by the plan.” 312 Consider the negative inference in the Preliminary Draft of IRS Examination Guidelines for Cafeteria Plans, discussed and reproduced behind Appendix Tab 2, where it asks: “Are benefits not provided by employer permitted to be paid through the plan (e.g., insurance provided by spouse’s employer)?”

Under any circumstances, can an employee "flex" a spouse's (not an employee) insurance premium which is currently under COBRA? Doesn't makes sense to me why they would want to do that as the spouse is eligible for coverage under the employee's company insurance but nevertheless, the question remains.

I know there has been added a bicycle commuter benefit - $20/ month Are these still... Transit and Van pooling $115 Parking $215 ...the same?

I understand (from IRS pub 503) that the educational level for qualifying care is kindergarten and below such as, for example, a nursery or pre-school. However, what about private schools that don't have a system that distinguishes from kindergarten and above or kindergarten and below. How can we tell if it's qualifying care? Is there an age at which we will say, your child is in kindergarten, it is not qualifying care? Do we just fudge it? Thanks for all your help so far.

Is there something online or perhaps a thread/post someone could link to here that provides a summary of rule changes for 2009? Thanks

Yes, except the company pays the employee directly and the employee pays the premium. This is how it worked for me when I was employee with my Dad's (now deceased) company. The employee forgot to notify the company that she had switched insurance plans, dropping the premiums she paid down to $75 per month. With only two months left to go in the plan year, there was no way to make any type of accounting adjustment (analogous to a change of election) without the employee paying back the extra money. With this new premium she was paying, she had already been reimbursed above the maximum. And this is indeed what we told the employee she had to do and from what I hear from our client, she's done it.

Our understanding also is that it's the plan's money. Usually what's left unspent is miniscule because we counsel the employees to make elections based on what they know they will spend. Remind them that they have to spend about 70 to 75 percent to break even with the tax benefit but that you'd rather they put money in their pockets by spending the whole amount. In some cases, the employer has been able to, after a few years of accumulation, give it back as an employer contribution to all the FSA's in the plan, say $10 to $20 per pay period.

lol I take it no one wants to be the one to say go after the employee for the money or not? Tell you what, I'll counsel them to do it and let you know what happens. We can all learn together. Is there anything in the law or your experience in it's application regarding getting money back from an over-reimbursed employee? Thanks

In order to "clean up the books", the employee would have to pay back the extra money paid out because as far as the employer was concerned, the employee was paying a $250 premium when in fact it was $75. The employee was receiving, for two months, $250 each month when in fact that employee had canceled that insurance and purchased one for $75 a month. So $500 was pretax from salary when in fact it should have been only $150, a discrepency of $350. Th employee has already deposited those checks so they can't be stopped. The employee has come forward to acknowledge their mistake and report the new premium but has not offered to pay the money back. The employer has not asked for it. However, the employer has asked our company, the provider of their admin software...... That is my question. It sounds like the resonable thing to do, but what I want to know is it legal or appropriate for the employer to try and recoup that $350 from the employee since it was the employee's fault for not reporting the change in premium?

Thanks for your replies so far. Forgive my ignorance and likely improper use of terms but I'm in a tough situation. I used to do only the software side for this company. But now the owner (my father) has passed away and I'm now finding myself doing the regulatory/insurance side as well while the estate is in probate and I decide whether or not to continue the business beyond my being the personal representative of the estate. There are no other employees/company directors etc. It was a one man show and frankly, he did it very well. But I am having trouble finding all the necessary info to help our clients manage their plans. From doing the software, I am familiar enough with FSA's to be "dangerous", but that is all. The employees of this particular client buy their own insurance privately, the employer reimburses them for their premiums. The reimbursements are not immediately available like those of an MFSA. One particular employee whose premiums were $250, changed their insurance to one whose premiums are $75. Problem is, they did not report the change until after several $250 reimbursement were made. One solution might be to change the election to $75 and consider the employee over-reimbursed until the contributions catch up. However, it's near the end of the year so there isn't enough time for catch-up. So by the end of the year, reimbursements to this employee for this benefit will exceed the amount elected (because of the change in premium from 250 to 75). So the question is, can or should the employer go after the money? J Simmons, that is correct. From the answers so far, it seems apparent that I must communicate to the client the importance of verifying that the premiums are paid (or invoiced) before reimbursement. I used to have such a benefit myself once and the only verification required by that company was me giving a copy of my insurer's invoice to my employer at the beginning of the year and that was it. I certainly see the value of doing it month by month analagous to submitting a claim. But the main question is, since the employee has already been overreimbursed, can the the company ask for it's money back assuming the company followed it's own rules outlined in the plan document? Perhaps since the employee didn't report the change, the company should assume that the employee had the more expensive coverage (even though he didn't want it) and make the appropriate deductions from the paycheck to cover the reimbursement until the change was reported? Problem there would be no invoices from the insurer to that effect. Thanks

This is regarding a premium reimbursement election. One of our clients has an employee who's insurance went way down. Unfortunately, it was not reported for a month and now more money has been sheltered from the employee's pay check than would be sheltered by the end of the year if the change had been reported on time. So, if we change the election to a compromise amount, we still cannot account for all the extra funds paid out by the end of the year. I know how to correct for this in our software but what should our client do? Are they within their rights to demand the extra money paid out to come back? Thanks

Thanks. It would seem not to be allowed in this case because the plan document does not specify such a change. Just to be certain we are speaking of the same thing; this is not a single employee undergoing a mid year change of election, this is an employer who wishes to change the parameters of a benefit for all employees mid year.

Thanks. Follow up question: If the plan document allows for a premium reimbursement account and the employee has a valid change of election condition (such as the termination of a dependent's employment), can the employee add a premium reimbursement election mid year to cover their dependent's premiums under COBRA at the other company?

Thanks. What would be the law in this case? Obviously such is a sort of a raise (but not through the right channels). So then if the plan docs for this year do not state that 50% will be covered by the employer then they have to wait till next open enrollment when they can change their plan docs and allow such a benefit to be available?

We have a client that wants to change their employer contribution amount from 100% EE only to 50% EE only as of 11/1/08. Can we do this outside of a S125 open enrollment or do we need to wait until our open enrollment for S125 which is 1/1? Thanks

I'm pretty new at this too. Where can one go to read these? Thanks.

Can a dependent, working for a different company, claim COBRA insurance premiums (dental/vision) through my FSA at my company?