Employee wants to reimburse company for claims paid

[bcspace]

An employee being laid off wants to reimburse the company for a large claim(s). Sounds suspicious to me, as if the company might not be communicating her rights. So I will probe a little further. However, are there procedures or rules to handle such things? What if the employee truly wants to reimburse because she doesn't feel good about taking more money than she's contributed? Should I simply recommend to the company that they tell her to keep it? What if the claims turned out to not be legit and the money is already reminbursed? Can the company expect to be reimbursed?

[J Simmons]

Definitely worth digging into deeper. Your questions suggest that you suspicious of the right types of things. I have never seen any regs that address the procedure. As far as the EE truly not feeling right about having been reimbursed more than was held out of her checks, if that's the only, true reason, then I recommend that the ER refuse the re-payment and simply assure her that's the way things work. I think you could mention that there are many worthy charities if she just can't bring herself to keep the windfall.

[LRDG]

There is potential for compliance problems if the ER accepts EEs return of paid eligible claims. IRS prohibits the Medical FSA from 'opperating in a manner' that limits payments to the available balance vs. IRS requirement that payments be based on the annual elected amount.

Allowing the EE to return funds results in the plan 'opperating in a manner' that is not compliant with IRS requirements for the payment of Medical FSA claims.