Unpaid FMLA

[Guest Joe Vasko]

What recourse does an employer have if an employee submits a claim for reimbursement (which exceeds the amount contributed), while on an unpaid FMLA leave? The employee elected to continue coverage under the Health FSA utilizing the "catch-up" method upon his return.

Thanks, Joe

[papogi]

You don't mention if the employee terminated while on LOA. If not, and the catch up option is elected, then the FSA must stay in force. The employee has access to the full amount (the uniform reimbursement requirement still applies during LOA). It becomes more complicated if the employee has claims paid during the LOA, and then does not return.

[Guest pension guru wannabe]

Can you expand on "it becomes more complicated if the Employee terminates while on LOA"? I'd like to know if there are other issues to consider when an Employee submits claims while on a LOA.

[papogi]

Even if no claims are paid during the LOA, it becomes more complicated in the sense that the employer has very little it can do to recoup the money (advanced FSA contributions). The employer may have unpaid wages, vacation pay, or profit sharing benefits from which the FSA deductions can be taken. This recoupment must not violate any state wage payment laws. The employer can certainly ask for the money, but they may not have much luck. If claims are paid during a time later determined to be a period of time with no coverage, the IRS has indicated that a check from the former employee is the only way to correct the improperly paid FSA claim. A 1099 issued to the former employee is not acceptable.