Lay Off

[Guest Sheryl Kopsing]

When a company has a lay off, how do others of you out there handle the claims for medical reimb? Do you allow claims for expenses while they are laid off to be reimbursed? Same with leave of absence?

[Guest ptpnthr]

The proposed regs say you have to provide coverage for 12 months, but may discontinue benefits if premiums are not paid and you may allow a participant to revoke an election at separation from service. It depends on what your document says, but I think the best way to handle it is to allow the employees to continue paying the premiums (on an after-tax basis) and continue to file claims for the remainder of the year. Most won't bother unless they have already put in more than they have taken out.

[Guest nb]

For us, former employees are allowed to file for reimbursement claims that were incurred prior to seperation. Only if the individual elects COBRA for the MRA can they be reimbursemed for claims after they have been termed.

[Guest Sheryl Kopsing]

Ptpnther: Layoff is not necessarily a "termination" and also is not a qualifying event under COBRA. Is Layoff considered a "separation from service"? I'm wondering if they shouldn't be treated as "limited participants" whereby they can be reimbursed for expenses for the whole year, but only up to the actual account balance. That is in our plan documents, but it doesn't specifically define what conditions it is for. It says "an employee who is no longer eligible for the plan due to reasons other that termination of employment may be treated as a limited participant and continue to submit expenses incurred through the plan year, but may only receive the amount in the account." Do you have this provision in any of your plan documents? And do you think we would be within the law to apply this to layoff and leave of absence?