LOA and Medical FSA

[Guest Carolynn]

I've read everything I can find about Leave of Absence, but can't find a direct answer to this question. I'm a TPA - how do I treat Medical FSA participants who go on a LOA? If there are no contributions, do I change the election to reflect that? Typcially they come back and pay back, but now, for the first time, I have a participant that went on LOA for two months, no contributions during that time, and now they have terminated. So I am really left wondering what is the total election, and what is their period of coverage. Our document doesn't seem to answer that question. Thanks for any help you can provide.

[papogi]

Commencements and returns from LOAs are typically considered status changes. Since you are a TPA, first check the flex plan doc for your client to see how they address LOAs. An employee going on LOA can usually term the account, then reinstate the account upon their return from LOA. They can pick up the payroll deductions as they were before the LOA. This in effect lowers the yearly election for the post-LOA period and also creates a window of time for unpaid dates of service. The original yearly election will apply for dates of service before the LOA, and the actual addition of all payroll deduction for the year will be the total election for dates of service after the LOA. As you said, the employee can also come back and pay back the employer, and it's now legal for an employer to require this. This way, the original yearly election is adhered to, and you don't have to go through the trouble of administering a decreased HCFSA. In your case, it appears the employee's account termed on midnight the day before the LOA began. The yearly election remains as it was, but the employee only has access to that annual election with dates of service before the LOA. Let me know if this does not address your specific question, since LOA rules run deeper depending on differing circumstances.