flex spending when transitioning from full time to perdiem
I am moving from a full time position with health benefits and 00 in flex spending to a perdiem position. I gave my notice to decrease from full time to perdiem without benefits as of 7/6/15. How does the flex spending work? What happens if I submit a claim with flex spending for more than I have contributed thus far? Will the company continue to bill me for the flex spending amount after my 7/6 change of status date? Can I submit claims for services prior to my change of status date of 7/6 even if I have given notice?
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Bottom line up front: ask your employer. This is also to make sure that they handle this correctly. You and they don't want to get this wrong.
What happens if I submit a claim with flex spending for more than I
have contributed thus far?
With a flex spending arrangement (FSA) for medical you can submit a claim for more than the current balance, and they can pay it/distribute it up to the amount you are supposed to be contributing this year.
Will the company continue to bill me for the flex spending amount
after my 7/6 change of status date?
If you were leaving the company the answer would be simple, when you leave the company The plan would come to an end, and you would no longer be making contributions. (see next section about claims).
If you were deciding to go with a plan offered outside this job while remaining in a status eligible for the company sponsored health insurance it appears the company could decide if the FSA could continue.
But if you are changing your status to be ineligible for health insurance though your company the Affordable care act may make it impossible for the FSA to remain.
Keeping health FSAs as excepted benefits
Prior to this guidance, assuring a health Flexible Spending Account
(FSA) was classified as an excepted benefit for purposes of HIPAA was
important for two primary reasons: so COBRA continuation was not
offered when the account was "overspent" and to avoid HIPAA
portability requirements. But now, in addition to assuring Health FSAs
are not swept into the W-2 reporting rules, FSA plans must also meet
HIPAA excepted benefit rules to be offered in compliance with the new
Affordable Care Act (ACA) requirements.
Generally, this means health FSAs must meet two conditions to be
offered:
Only individuals eligible for employer-provided major medical coverage can be offered
the health FSA. Employers with health FSAs
must have an underlying ACA-compliant group health insurance plan. As
an example, XYZ Co. offers a health FSA to full-time employees and
part-time employees. However; the part-time employee population is not
eligible to enroll in XYZ Co.'s major medical plan. Under this
scenario, part-time employees can no longer enroll in an FSA. An
amendment is required to XYZ Co.'s Plan Document to remove this group
as eligible employees under the FSA.
In addition, the health FSA must limit the maximum payable to 2 times the participant's salary reduction or, if greater, the
participant's salary reduction plus 0. What does this mean? Simply
that health FSAs can include employer contributions of 0 or up to a
dollar for dollar match of each participant's election.
If the health FSA fails either of these conditions, it is subject to
ACA's market reforms, such as no cost sharing for preventive services
and the prohibition against annual and lifetime limits. By definition,
the health FSA will not meet these ACA requirements.
The linked document also mentions Treasury notice 2013-54 if you want to get even more information.
Can I submit claims for services prior to my change of status date of
7/6 even if I have given notice?
If they stop your contributions and your insurance on July 5th or 6th you can continue to submit claims for expenses that happened between January 1st and and the end of the Insurance and FSA. If they do continue to make deductions for the FSA after your switch to part time you should expect to be able to continue to make claims.
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