FSA reimbursement beyond grace period?

[Guest Carolyn Barnard]

Can an employer allow reimbursement of expenses through a flexible spending account beyond the plan's grace period for one individual with special circumstances? Can my company, as the TPA, be held liable if the employer authorizes us to pay a claim beyond grace?

[KIP KRAUS]

What special circumstances?

[Guest Carolyn Barnard]

The participant has worked for other companies that had a 90-day grace period for their cafeteria plans. His current employer has a 60-day grace period, and he says that wasn't communicated to him. His SPD does have the proper wording, but he didn't read it, as is the case with most employees. The 90-day grace is pretty standard, so the employer is allowing this person a few more days to send in claims.

[KIP KRAUS]

Carolyn:

You hit the nail on the head. Employees don’t bother reading their SPDs. Isn’t it amazing how we have to baby sit the flighty and irresponsible? I’m sure there were other mitigating circumstances that prevented the employee from getting his claims in within the 60-day period too.

Don’t know what the chances are that leniency in this situation would ever be caught in an IRS audit, but if it were I I’d go ahead and extend the extra time just to keep peace. Even though it would irritate me to no end. I would also ask him for information from his previuos employer that indicates they had a 90-day period.

Not my advise to do it,just what I'd do for all you legal beagles out there who don't like me giving advise.