Reimbursement Deadlines

[Guest NinaB]

Is there a federal guideline re: deadlines for reimbursements and notification of such or is it an arbitrary decision made by plan administrator?

[Lisa Hand]

Prop. Treas. Reg. 1.125-1, Q/A-17, states that ".. expenses that are reimbursed under an accident or health plan must have been incurred during the period for which the participant is actually covered by the accident or health plan....However, the actual reimbursement of the covered medical care expense may be made after the applicable period of coverage."

The length of the close-out period is not set by the IRC or regulations, but rather the plan sponsor/administrator and should be communicated at a minimum in the Plan documents. Most plans also detail it on the enrollment form as well as confirmation letters.

[GBurns]

Regardless of what any Plan Document says or claims, many plans are subject to either a State or ERISA "Prompt Payment" rules. I advise that you see which ones govern your plan/plans and act accordingly.

[SLuskin]

How would the prompt payment rules affect the length of the grace period offered in a flex plan? For example, most of our employers choose 90 days. If an employee waits until the 89th day and we reimburse the day after the claim is received in our office, isn't that prompt payment?

Some of the employers only want a 60 day grace period. I think that the prompt payment starts when the claim is received in our office, and not the number of grace days chosen by the employer/sponsor.