Change In Status Due To Divorce Decree.

[Guest javery]

I have a participant who had recently gotten divorced, due to a divorce being a change in status she increased her pledge amount. The participant just submitted claims for reimbursement. The effective date of change per her employer is November 9, 2001 she submitted claims for reimbursement dated prior to November 9, 2001 are these claims eligible for reimbursement since the effective date of change is after the dates of service?

[Sandra Pearce]

While a divorce is a family status change that could allow a participant to change the annual election to their Section 125 medical spending account, the change must be consistent (make sense) as it relates to the family status change. Adding dependents seems more consistent with allowing an increase in the election. On the surface, I would not have allowed an increase in a medical spending account due to a divorce or loss of dependents. With that said, even if the increase was consistent with the family status change I do not believe that the expenses prior to the change would be eligible for reimbursement from the portion of the account that represented the increase.

[KIP KRAUS]

I agree with Sandra that on the surface a divorce would not necessarily be a reason for a person to increase her medical contributions to a FSA. However, if she had been covered under her employer’s medical plan as primary and under her former husband’s medical plan as secondary a case could be made for her to increase her FSA contributions.

[SLuskin]

In addition, the former spouse could have had an FSA at his job for a portion of her or kids' expenses, and now has lost that benefit.

We do think that the increase effective date should be the date that you use for the expenses.