FSA Election Change Inlight of Disaster

[Guest Bucky.ks]

I am the benefit consultant for the hospital in Greensburg, KS (or what used to be Greensburg, KS). They have set up a MASH Tent area on the edge of town from which they now provide limited services. Several employees are obviously incurring a lot of expenses to rebuild their lives.

The question is, can an employee change or terminate their Healthcare Spending account election as a result of their "change in worksite" as noted in the Flexible Answer Book; Q 17:2? It says worksite, but I guess I'm looking for definition. This is from a 1977 temporary Treasury Reg that lists events that constitute a "change in status".

bucky.ks

[J Simmons]

For more updated regulatory reference (2001 final regs), there's IRS Reg. §1.125-4©(2)(iii).

It doesn't define but simply uses the term 'worksite'. I know of no authoritative definition or interpretation.

The consistency rule, however, sheds some light on what is meant and is likely problematic for you using the change of worksite provision. For example, IRS Reg. §1.125-4©(4), Example 4 provides "(i) Employer R maintains a calendar year cafeteria plan under which full-time employees may elect coverage under one of three benefit package options provided under an accident or health plan: an indemnity option or either of two HMO options for employees who work in the respective service areas of the two HMOs. Employee A, who works in the service area of HMO #1, elects the HMO #1 option. During the year, A is transferred to another work location which is outside the HMO #1 service area and inside the HMO #2 service area. (ii) The transfer is a change in status under paragraph ©(2)(iii) of this section (relating to a change in worksite), and, under the consistency rule in paragraph ©(3) of this section, the cafeteria plan may permit A to make an election change to elect the indemnity option or HMO #2 or to cancel accident or health coverage. (iii) The change in work location has no effect on A's eligibility under R's health FSA, so no change in A's health FSA is authorized under this paragraph ©."

No flex account changes are permitted, because location doesn't have a bearing on the use of them. If the change of geographical locations means that the employee now no longer is eligible for the previously elected coverage, the employee can make a mid-year change to any coverage now available, given his new location.

Your situation, as sad and sympathetic as it is, doesn't seem to involve a geographical change that would permit mid-year benefits election changes.

[Guest Bucky.ks]

My exact thoughts from a common sense standpoint. Most helpful.

[LRDG]

Emergency relief provisions were issued in the aftermath of the hurricanes of 2005 for the affected areas of the Gulf Coast. I do not recall if these were issued by DOL, Treasury or IRS.

If you or your organization are a member/s of a benefits association, ECFC for instance, they would likely be of assistance.

Good luck finding answers and getting the help you need.