FSA Payment After Termination

[Guest chloe]

This is a healthcare FSA. Plan year begins on 7/1. The employee terminated employment 8/1. Employee did not elect COBRA. Due to system problems, the termination was not put into the system until September. However, claims were reimbursed for services rendered in August (after the term date). Because the services were incurred after the termination and the employee did not elect COBRA, can we pursue reimbursement of those claims from the former employee?

[papogi]

Absolutely. You should send a letter to the individual explaining the issue and the need to have the funds returned. I doubt you'll have much luck, but it could go either way.

[jsb]

You might encourage the employee to elect COBRA, at least through the time period that would cover his claims. This gives you both an "out" to handle this properly. If 8/1 was term date, and COBRA offer timely made, the QB still has until at least until 9/30 (60 days) to make the COBRA election.