Uniform coverage of HFSA

[Guest LCorbin]

I've seen varying responses to the following scenario and am trying to get some consensus.

Employee elects to contribute $480 to his Health FSA. He pays a pro-rated amount on a monthly basis via payroll deduction (i.e. $40/month). He does not request reimbursement any time during his participation, terminates employment with only $240 in his account, but has saved up receipts for $480 incurred prior to his termination. His SPD states that coverage under the HFSA ceases when his contributions cease and he is otherwise ineligible to participate (e.g., no longer an active employee).

Question:

1. Could employee submit his claims within 90 days after his termination date for the entire $480 even tho he only has $240 in his account? If not, then

2. Would employee have to be offered COBRA to get the full benefit of his original election?

3. If employee is offered COBRA and only makes one add’l month of contribution at $40 + $2 admin fee, can he request the entire $480 in receipts during that month and then terminate?

Your thoughts are welcome!

[Sandra Pearce]

Depending upon what your plan says about deadlines for filing claims, the ex-employee can timely file a claim for out-of-pocket medical expenses incurred during the period of participation in the Plan year (period employed) and be reimbursed the entire amount elected at the beginning of the Plan year.