Taxation of financial gain from FSA?

[Benefits 101]

If an employee only paid in $500 to her medical FSA, used up her entire $5000 election (i.e. for 2012, the limit is still 5K), then left employment. Does she have to report the extra $4500 she withdrew from her FSA (i.e. the portion above and beyond her contributions) as taxable income?

[Chaz]

Short answer: No, presuming that she was properly reimbursed for qualified medical expenses with that $4,500.