Dependant Care FSA eligibility

[Guest Fay]

I have been told by our FSA administrator that when on maternity leave, an employee is no longer considered an active employee, and therefore, not eligible to continue her Dependent Care FSA. However, maternity leave (time before delivery and until doctor's release back to work) is considered disability. When an employee is out on disability, why would that disqualify them from participation? I can understand once the employee is released back to work, and she chooses not to return and FMLA kicks in, that during that time period she would not be eligible. Appreciate any help.

[KIP KRAUS]

Fay:

What exactly do you mean when the administrator says you cannot participate? If you have money in your Dependent FSA account, you surely can request reimbursement while you are on maternity leave. Please explain more about your situation.

[Guest Fay]

The employee will probably be leaving on or about July 1 until about October 1. I was told that during that time period she could not participate - that she had to terminate out of the plan when she left and could reenroll upon returning to work. In other words, any claims she had up until she left would be reimbursed but she could not file claims during her leave because she was not "actively at work" (and therefore not in need of daycare in order to go to work).

[Guest julieh]

Fay, you might want to double check on this, but my understanding is that you can collect dependent care deductions up front, or monthly while the employee is on matenity leave, and the employee would be considered an active participant and eligible to participate in the plan. This would mean that they could submit receipts for the dates they were considered disabled.

[KIP KRAUS]

Fay:

I don't know about the up-front money for child car, but I do know that if an employees has money in an FAS account, they can get reimbursed for qualified expenses while on disability leave. It sounds to me like your administrator is generalizing.

[Guest HIPAAdrome]

But remember that Section 129 requires that an expense be incurred to allow the employee to work in order to be reimbursable. You cannot submit Section 129 expenses while you are out sick, because they are not incurred to enable you to work.

[Guest ljt064]

My spouse has been participating in a Dependent Care program for the past 2 years. Just last week, she was informed by her Employer that an evaluation of the company wide program has determined that the percentage of highly compensated employees is to high and that she is no longer eligible to participate in their program for calendar year 2000. My company offers a Dependent Care program, however, the open enrollment plan has long since closed. My question is does my Company have an option to allow me to begin participating in the program for calendar year 2000?

[Kirk Maldonado]

There was a thread on this topic last week. You might want to check it out.

[Guest mls]

Regarding the first issue above about accessing the dependent care account while you are on leave - we have done extensive research on this and have asked our FSA TPA, Ceridian Benefit Services about this issue and they agree that the law says that the purpose of the dep care plan is to help pay for dep care expenses so you can work. If you are not working, you cannot use the monies. Our TPA follows this for all their clients. If the leave is an FMLA leave, they can de-enroll in the plan and then re-enroll when they return from leave. Hope that helps.