FSA's and termination continued

[Guest Greta]

I have a question regarding FSA's when employees are laid off and receive salary continuance for their severence payout. (During salary continuance, the FSA contribution would still be taken out.)

What is the cutoff date for claims that can be reimbursed? Is it the last date of active employment or when the coverage ends? (To clarify, I'm asking about the date of the claim - not the timeframe to reimburse the claim.)

From what I read in the earlier post, as long as the ee is making deposits then they can incur claims. I couldn't find the regs on this situation.

Thanks, Greta

[papogi]

There really isn’t anything in the regs regarding this because it is assumed that if the individual is eligible and is making required contributions, then they are an active participant in the plan, and dates of service falling within that time are reimbursable. Treas Reg 1.125-2 Q-7(b)(3) comes closest when it says that the period of coverage under a health FSA terminates if the employee ceases to make required premium payments. By definition, an employee who is making required contributions must still be in the period of coverage. As you stated, dates of service are what matter.