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Joseph
Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 4829
Experience:  Extensive experience representing employees and management
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I enrolled in a flexible spending account this year not knowing

Resolved Question:

I enrolled in a flexible spending account this year not knowing my daughter was too old for the pretax benefit. When I realized the issue my cmopany's benefits administrator told me it was fine I would just need to pay taxes. We changed administrators in January and the new firm has refused to refund $890 of my payroll deductions. I'm pretty sure they can't keep my pay and I just need to pay taxes on it - know its my fault for not knowing the tax code but does anyone? They have my daugther's birthdate and allowed me to sign up anyway. Been going through a formal review process and they promised a decision in 30 days and just blew by their own deadline. Please help I need my money
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Joseph replied 1 year ago.
Hello and welcome to JustAnswer.

I'm sorry to hear about your situation and hope I can help.

Unfortunately, any money that is left unspent in a flexible spending account reverts to the employer.

If your employer agrees that it was responsible for failing to advise you (which the benefit administrator did) about the details of the plan, including the knowledge that your daughter was too old to be eligible for it, then your employer would be the one responsible for refunding the amount left to you less taxes.

It would of course be helpful if you have a written or otherwise recorded record of the benefits administrator's assurance that you would only have to pay taxes on the money left in your flexible spending account.

However, unfortunately, there is nothing in the law that actually requires an employer to give money left in a flexible spending account back to the employee, and most employers keep the money to pay the benefit administrators for setting up the accounts.

For more information regarding the 'use it or lose it' rule that cafeteria plans are subject to (a flesible spending account is one of those) see here:

http://www.trion.com/services/section-125-plans/

I sincerely XXXXX XXXXX had better news to give you, and wholeheartedly agree that it is incredibly unfair for you not to be reimbursed for your payroll deductions, but I hope you appreciate a direct and honest answer to your question.

Please rate my answer positively so I get credit for my work or please ask me any follow up questions that you have here.

Also, please make sure to rate me highly on your customer satisifcation survey. High ratings ensure that I can continue to help customers like you on JustAnswer.

Thanks and best of luck!
Customer: replied 1 year ago.


Hi,

I do appreciate the answer but want to clarify one thing - I did use the funds and submitted a reciept - I still employ a nanny. Does that change things at all?

 

Also in terms of having the agreement to reimburse me still recorded I have a record of the previous benefits administrator reimbursing me this year.

 

thanks

Expert:  Joseph replied 1 year ago.
Hello Kim,

I'm a little confused, since you wrote that you had $890 left in the flexible spending account? If you did use the funds and submitted a reciept for your use of them there shouldn't be a problem and the flexible spending account should cover it.

Customer: replied 1 year ago.

Thanks for the clarification - I will send you the credit but want to make sure I understand.


 


I used the funds left the account, submitted a reciept and was told they can't reimburse me because she wasn't eligible. She is 14 this year so wasn't eligible when I enrolled her either but I was reimbursed for $1,140 earlier in the year and I did use all the funds paying an after school nanny but they won't reimburse me due to her age and told me it was fraud to ask for my money back.

Expert:  Joseph replied 1 year ago.

Also, it is definitely helpful that you already have the benefits administrator on record for reimbursing you for the amount that was taken from your payroll and not used, since that establishes a precedent for that practice.

 

Thanks for the clarification. Unfortunately, that is correct, since dependent care flexible savings accounts can only be used for minors 13 years of age and younger.

 

See here:

 

http://www.aetna.com/members/fsa/spendingAccounts/DepcareFSA/dependentcarefsa.html#Qualifying_Dependents

 

(That is, unless your daughter is incapable of self-care due to a physical or mental handicap).

 

It definitely isn't fraud to ask for your money back, but as I mentioned, unfortunately, there is nothing in the law that requires an employer to return money left in a flexible spending account and most do not do so.

Joseph, Lawyer
Satisfied Customers: 4829
Experience: Extensive experience representing employees and management
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