Tricky FSA question

[Guest JohnWS]

A employee was let go on July 18 (last day of work) but the official employment termination date is August 1. Within these 2 weeks the employee used all available FSA balance spending $1200 more than total contributions made. Can the employer be reimbursed for that money one way or another? Does plan participation end on the last day of work or on termination date? Was the employee even eligible?

[GBurns]

Usually participation ends on termination unless otherwise specified and as allowed/dictated by the Plan Document. Then there is the COBRA aspect.

If the expenses were incurred during the period of coverage, then there is no legal way to get the money back. Just the nature of the beast.

[SLuskin]

Did payroll continue through August 1? If so, then deductions would have been made for the FSA and those claims would most definitely have to be paid.

George is correct in that the employer can never recoup any difference between funds disbursed and funds contributed.