Cafeteria Plan Employer Contribution

[Guest dparks]

An employer provides each eligible employee with $2,400 a year on a prorata basis to use toward their cafeteria plan. If an employee chooses to use this money toward their medical flexible spending account, do they have access to the full $2,400 on the first day of the plan year? Also, what happens if this employee goes out on an unpaid medical leave (not subject to FMLA)? Do they still have access to the full $2,400? Can they continue to submit claims incurred while out on leave?

[J Simmons]

An employer provides each eligible employee with $2,400 a year on a prorata basis to use toward their cafeteria plan. If an employee chooses to use this money toward their medical flexible spending account, do they have access to the full $2,400 on the first day of the plan year? Also, what happens if this employee goes out on an unpaid medical leave (not subject to FMLA)? Do they still have access to the full $2,400? Can they continue to submit claims incurred while out on leave?

The full amount ($2,400) would have to be available in the health flex account on day one of the plan year. The prorata basis applies to credits the employee is given towards the payment for the health flex account. The health flex account elected for the year is yet $2,400, and it must all be available for reimbursement of qualifying expenses from day one.

If the unpaid medical leave is not subject to FMLA, then you need to check what your cafeteria plan documentation provides regarding leave. If it is silent, I think they can yet submit claims--after all, the employee is on leave, not terminated.

[QDROphile]

To clarify, the full amount of the medical spending account coverage elected is available from the first day of coverage. The amount of employer dollars devoted to paying for the coverage is irrelevant, even though it may be identical to the amount elected.