Terminated Employee

[Guest Darla K]

I have an employee who has been terminated and is turning in reimbursement claims prior to her term date for over the amount that she had contributed. Her employer is telling me that she signed a form when she started working there that they can take out the extra amount from her final paycheck to cover her claims. The problem is she terminated in February and has had no more checks since then for them to deduct from, and they are trying to get me to write her check for less the amount of the overage to even everything out. Is this right or isnt she eligible to get the whole reimbursement that she had claimed for the whole year even though she hasnt contributed it due to termination?

[mroberts]

This is not being handled properly regardless of what she signed. If you have flexible spending accounts, you can not recoup amounts that employees are getting reimbursed above what they have already contributed. If an employee has allocated a $1000 into a calendar year flex account, he or she has the $1000 available Janaury 1 and upon termination, any amounts that were reimbursed above what the employee had already contributed, up to $1000 total, needs to be eaten by the employer. Otherwise, the plan will not satisfy the requirements to be pre-tax.

[Guest Darla K]

That is what I thought. I just thought that I would get some affirmation before I went to the head of the employer to tell them again that this is the way it should be and that the employee has the full annual amount available to her. Thank you for you response.