I got laid off today - FSA Question // Anyone here in HR?

[Anonymous]

So, I got some bad news this morning from my boss that I am being laid off, effective today. Big bummer to start off the New Year. I am going to process my feelings later but I have a financial question so hoping that this is the right place where I can get a clear cut answer.

I signed up for $3k in my FSA for 2023. Can I spend all of that money ($3k) today and seek a reimbursement?

There is a termination document that covers FSA expenses that I received from HR that says: You will be able to submit claims incurred prior to your termination date until the end of the grace period (90 days)

In reading that statement, I interpret that to mean that I can only seek reimbursement for expenses that I incurred before today (Jan 3, 2023 is my termination date). Can someone who is knowledgable about these types of events let me know if I can make a $3k purchase on my termination date and qualify for reimbursement? Or did I miss out on using my FSA because I did not buy anything FSA related on Jan 2, 2023?

[Anonymous]

Depends, most places will freeze the minute they find out your are quitting or terminating. Some places will let you use it all.

[Anonymous]

Anonymous wrote:Depends, most places will freeze the minute they find out your are quitting or terminating. Some places will let you use it all.

I am not an expert, but I always understood that to be your money, whether you quit or are let go.

The question about when you have to incur the expenses, that I never really thought about.

[Anonymous]

Hoping someone from HR can chime in.

OP

[Anonymous]

Yes, if you had incurred 3k in expenses between 1/1-1/3/23 you would be reimbursed for all 3k. Even though you haven’t contributed the 3k yet. That is an IRS, not plan rule. The submission deadlines are plan specific.
-20+ years in HR

[Anonymous]

Is the money actually in your FSA? Doesn't that get put in a little at a time? For ours a specific amount comes out of each paycheck. Son on Jam 3 my FSA wouldn't have any new money in it yet.

[Anonymous]

Ex-benefits director here...

Assuming this is the medical FSA, right? The full $3k should be available to you to use through end of day today. You are still employed today so expenses you have today should count towards the FSA.

You usually have 90 days to submit the expenses but they have to have an incurred (service) date of today.

Do you have the debit card / online access from years prior? i would get right on FSAstore.com or Amazon's FSA store and start spending that money like a mad woman.

[Anonymous]

Anonymous wrote:Yes, if you had incurred 3k in expenses between 1/1-1/3/23 you would be reimbursed for all 3k. Even though you haven’t contributed the 3k yet. That is an IRS, not plan rule. The submission deadlines are plan specific.
-20+ years in HR

OP here. Thank you. Hoping that you come back to this thread because I have one more question for you. My termination date is 1/3/23. The written statement from the HR team says that I will be able to submit claims incurred *prior* to my termination date (1/3/23), which would suggest that I would have needed to make my FSA purchases on 1/1 or 1/2. Is that IRS specific or plan specific?

Here is the statement again: You will be able to submit claims incurred prior to your termination date until the end of the grace period (90 days)

[Anonymous]

Anonymous wrote:Ex-benefits director here...

Assuming this is the medical FSA, right? The full $3k should be available to you to use through end of day today. You are still employed today so expenses you have today should count towards the FSA.

You usually have 90 days to submit the expenses but they have to have an incurred (service) date of today.

Do you have the debit card / online access from years prior? i would get right on FSAstore.com or Amazon's FSA store and start spending that money like a mad woman.

OP Here. Thank you. I guess I will just risk it and make the purchases today. If they don't reimburse it, I will just return it all.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes, if you had incurred 3k in expenses between 1/1-1/3/23 you would be reimbursed for all 3k. Even though you haven’t contributed the 3k yet. That is an IRS, not plan rule. The submission deadlines are plan specific.
-20+ years in HR

OP here. Thank you. Hoping that you come back to this thread because I have one more question for you. My termination date is 1/3/23. The written statement from the HR team says that I will be able to submit claims incurred *prior* to my termination date (1/3/23), which would suggest that I would have needed to make my FSA purchases on 1/1 or 1/2. Is that IRS specific or plan specific?

Here is the statement again: You will be able to submit claims incurred prior to your termination date until the end of the grace period (90 days)

Yes, you should still be able to make a purchase today. You can also COBRA the plan for 1 month and still access all benefits. Generally signing up for COBRA for an FSA makes no sense since you have to fund with post-tax dollars, but that is the only way to access if you had funds you contributed but didn’t spend.

[Anonymous]

Anonymous wrote:Is the money actually in your FSA? Doesn't that get put in a little at a time? For ours a specific amount comes out of each paycheck. Son on Jam 3 my FSA wouldn't have any new money in it yet.

With the medical FSA when it’s funded doesn’t matter. The full amount you elected is available to you on 1/1 each year.

[Anonymous]

Thank you everyone for your help on such a difficult day. I appreciate everyone who responded.

-OP

[Anonymous]

Anonymous wrote:Ex-benefits director here...

Assuming this is the medical FSA, right? The full $3k should be available to you to use through end of day today. You are still employed today so expenses you have today should count towards the FSA.

You usually have 90 days to submit the expenses but they have to have an incurred (service) date of today.

Do you have the debit card / online access from years prior? i would get right on FSAstore.com or Amazon's FSA store and start spending that money like a mad woman.

Yes, this. All of the planned funds are available through the day you are still employed. I in fact once cut short an exit interview and drove to my optometrist before they closed at 6pm. Someone called me as I was walking in the door, and I was like "Look, I have 10 minutes to spend $2000. I can't talk, I'll call you back."

The assistant just smiled at me and said "We can definitely help you with that." And they did!

[Anonymous]

+1 for medical FSA. All funded and available upfront

[Anonymous]

Anonymous wrote:Thank you everyone for your help on such a difficult day. I appreciate everyone who responded.

-OP

All the best OP!