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Flexible Spending Account - California - The company that manages

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my flexible spending account says...
Flexible Spending Account - California - The company that manages my flexible spending account says that the medical expenses I've incurred while out on medical leave of absense (2-1/2 months) are not eligible for my FSA funds because they did not receive a Cobra form from me. When I was sick, I called my HR department and told them that I will be out on medical leave and asked if they would send me all the forms I need to make sure my benefits were continued. I filled them all out and returned them in the time specified. They said yes, then sent me a bill for my benefits, and I paid them. I don't have copies any more, I was out over a year ago, and the company managing my FSA just started to reject my payments requested (now are locking my card and I can't use any of my FSA funds until this is cleared up). I tossed everything about 6 months ago. When I came back to work, my employer increased my FSA contributions (taking the money out of my check) so I could reach the yearly amount I signed up for until paid in full.

Now, the company who manages my FSA says they never got the Cobra form, so I can't use the funds to pay for medical expenses while I was out. Additionally, They are not paying for expenses that I have paystubs for, for 80 hours of work and showing the FSA contributions being made. They have dates of absence that are longer than my dates out. They say I should talk to my employer.

My employer says it's my fault for not being covered, because I should have known to ask for separate coverage for FSA while I was out because it's on the company website (on the 17th page in miniscule type what would happen if I did not send in a cobra form). I believe I just got an "unknowledgeable" person (someone in India) and want to call back my company's benefit center (HR), but I would like to know the law first. I sure won't talk to someone in India if they answer, will go to HR in person. How did my company know to charge me for my other benefits if they did not receive some sort of notice from me?

It's my money, was taken out of all my paychecks for the year, and I asked my HR department benefit center to get the forms I needed so my benefits could continue while I was out.
Submitted: 4 years ago.Category: California Employment Law
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Answered in 5 minutes by:
8/20/2013
California Employment Lawyer: davidweilbacher,
 replied 4 years ago
davidweilbacher
Category: California Employment Law
Satisfied Customers: 335
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David Weilbacher, Esq. :

Hello, my name is XXXXX XXXXX I’ll be happy to assist you. Please stand by while I review your question, and do any necessary research.

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California Employment Lawyer: socrateaser, Lawyer replied 4 years ago
socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 39,346
Experience: Retired (mostly)
Verified

Hello,

Different contributor here. The contributor who first responded to you appears to have exited the conversation. Please permit me to assist.

Title 26 C.F.R. § 54.4980B–2 (Q&A-8 (b) - (e) discusses the law concerning FSA requirements under COBRA. The text of the Treasury Regulation is provided below for your convenience. It is very complicated -- and in order to interpret your rights, you may need information about your employer's health care plans and FSA provisions, which cannot be obtained without a subpoena.

Because of this, I suggest that you may want to contact the U.S. Department of Labor and ask them to investigate on your behalf. Click here.

 

Note: I can practically guarantee that neither your employer, nor your FSA provider clearly understands its obligations under this regulatory section -- because I can barely decipher the regulation, and I do this for a living.

The regulation follows below:

Q-8: How do the COBRA continuation coverage requirements apply to cafeteria plans and other flexible benefit arrangements?

 

A-8: (a)(1) The provision of health care benefits does not fail to be a group health plan merely because those benefits are offered under a cafeteria plan (as defined in section 125) or under any other arrangement under which an employee is offered a choice between health care benefits and other taxable or nontaxable benefits. However, the COBRA continuation coverage requirements apply only to the type and level of coverage under the cafeteria plan or other flexible benefit arrangement that a qualified beneficiary is actually receiving on the day before the qualifying event. See paragraphs (b) through (e) of this Q&A-8 for rules limiting the obligations of certain health flexible spending arrangements. [emphasis added]

 

(2) The rules of this paragraph (a) are illustrated by the following example:

 

Example: (i) Under the terms of a cafeteria plan, employees can choose among life insurance coverage, membership in a health maintenance organization (HMO), coverage for medical expenses under an indemnity arrangement, and cash compensation. Of these available choices, the HMO and the indemnity arrangement are the arrangements providing health care. The instruments governing the HMO and indemnity arrangements indicate that they are separate group health plans. These group health plans are subject to COBRA. The employer does not provide any group health plan outside of the cafeteria plan. B and C are unmarried employees. B has chosen the life insurance coverage, and C has chosen the indemnity arrangement.

(ii) B does not have to be offered COBRA continuation coverage upon terminating employment, nor is a subsequent open enrollment period for active employees required to be made available to B. However, if C terminates employment and the termination constitutes a qualifying event, C must be offered an opportunity to elect COBRA continuation coverage under the indemnity arrangement. If C makes such an election and an open enrollment period for active employees occurs while C is still receiving the COBRA continuation coverage, C must be offered the opportunity to switch from the indemnity arrangement to the HMO (but not to the life insurance coverage because that does not constitute coverage provided under a group health plan).

 

(b) If a health flexible spending arrangement (health FSA), within the meaning of section 106(c)(2), satisfies the two conditions in paragraph (c) of this Q&A-8 for a plan year, the obligation of the health FSA to make COBRA continuation coverage available to a qualified beneficiary who experiences a qualifying event in that plan year is limited in accordance with paragraphs (d) and (e) of this Q&A-8, as illustrated by an example in paragraph (f) of this Q&A-8. To the extent that a health FSA is obligated to make COBRA continuation coverage available to a qualified beneficiary, the health FSA must comply with all the applicable rules of §§ 54.4980B-1 through 54.4980B-10, including the rules of Q&A-3 in § 54.4980B-5 (relating to limits).

 

(c) The conditions of this paragraph (c) are satisfied if—

(1) Benefits provided under the health FSA are excepted benefits within the meaning of sections 9831 and 9832; and

(2) The maximum amount that the health FSA can require to be paid for a year of COBRA continuation coverage under Q&A-1 of § 54.4980B-8 equals or exceeds the maximum benefit available under the health FSA for the year.

 

(d) If the conditions in paragraph (c) of this Q&A-8 are satisfied for a plan year, then the health FSA is not obligated to make COBRA continuation coverage available for any subsequent plan year to any qualified beneficiary who experiences a qualifying event during that plan year.

 

(e) If the conditions in paragraph (c) of this Q&A-8 are satisfied for a plan year, the health FSA is not obligated to make COBRA continuation coverage available for that plan year to any qualified beneficiary who experiences a qualifying event during that plan year unless, as of the date of the qualifying event, the qualified beneficiary can become entitled to receive during the remainder of the plan year a benefit that exceeds the maximum amount that the health FSA is permitted to require to be paid for COBRA continuation coverage for the remainder of the plan year. In determining the amount of the benefit that a qualified beneficiary can become entitled to receive during the remainder of the plan year, the health FSA may deduct from the maximum benefit available to that qualified beneficiary for the year (based on the election made under the health FSA for that qualified beneficiary before the date of the qualifying event) any reimbursable claims submitted to the health FSA for that plan year before the date of the qualifying event.

 

(f) The rules of paragraphs (b), (c), (d), and (e) of this Q&A-8 are illustrated by the following example:

Example. (i) An employer maintains a group health plan providing major medical benefits and a group health plan that is a health FSA, and the plan year for each plan is the calendar year. Both the plan providing major medical benefits and the health FSA are subject to COBRA. Under the health FSA, during an open season before the beginning of each calendar year, employees can elect to reduce their compensation during the upcoming year by up to $1200 per year and have that same amount contributed to a health flexible spending account. The employer contributes an additional amount to the account equal to the employee's salary reduction election for the year. Thus, the maximum amount available to an employee under the health FSA for a year is two times the amount of the employee's salary reduction election for the year. This amount may be paid to the employee during the year as reimbursement for health expenses not covered by the employer's major medical plan (such as deductibles, copayments, prescription drugs, or eyeglasses). The employer determined, in accordance with section 4980B(f)(4), that a reasonable estimate of the cost of providing coverage for similarly situated nonCOBRA beneficiaries for 2002 under this health FSA is equal to two times their salary reduction election for 2002 and, thus, that two times the salary reduction election is the applicable premium for 2002.

(ii) Because the employer provides major medical benefits under another group health plan, and because the maximum benefit that any employee can receive under the health FSA is not greater than two times the employee's salary reduction election for the plan year, benefits under this health FSA are excepted benefits within the meaning of sections 9831 and 9832. Thus, the first condition of paragraph (c) of this Q&A-8 is satisfied for the year. The maximum amount that a plan can require to be paid for coverage (outside of coverage required to be made available due to a disability extension) under Q&A-1 of § 54.4980B-8 is 102 percent of the applicable premium. Thus, the maximum amount that the health FSA can require to be paid for coverage for the 2002 plan year is 2.04 times the employee's salary reduction election for the plan year. Because the maximum benefit available under the health FSA is 2.0 times the employee's salary reduction election for the year, the maximum benefit available under the health FSA for the year is less than the maximum amount that the health FSA can require to be paid for coverage for the year. Thus, the second condition in paragraph (c) of this Q&A-8 is also satisfied for the 2002 plan year. Because both conditions in paragraph (c) of this Q&A-8 are satisfied for 2002, with respect to any qualifying event occurring in 2002, the health FSA is not obligated to make COBRA continuation coverage available for any year after 2002.

(iii) Whether the health FSA is obligated to make COBRA continuation coverage available in 2002 to a qualified beneficiary with respect to a qualifying event that occurs in 2002 depends upon the maximum benefit that would be available to the qualified beneficiary under COBRA continuation coverage for that plan year. Case 1: Employee B has elected to reduce B 's salary by $1200 for 2002. Thus, the maximum benefit that B can become entitled to receive under the health FSA during the entire year is $2400. B experiences a qualifying event that is the termination of B 's employment on May 31, 2002. As of that date, B had submitted $300 of reimbursable expenses under the health FSA. Thus, the maximum benefit that B could become entitled to receive for the remainder of 2002 is $2100. The maximum amount that the health FSA can require to be paid for COBRA continuation coverage for the remainder of 2002 is 102 percent times 112 of the applicable premium for 2002 times the number of months remaining in 2002 after the date of the qualifying event. In B 's case, the maximum amount that the health FSA can require to be paid for COBRA continuation coverage for 2002 is 2.04 times $1200, or $2448. One-twelfth of $2448 is $204. Because seven months remain in the plan year, the maximum amount that the health FSA can require to be paid for B 's coverage for the remainder of the year is seven times $204, or $1428. Because $1428 is less than the maximum benefit that B could become entitled to receive for the remainder of the year ($2100), the health FSA is required to make COBRA continuation coverage available to B for the remainder of 2002 (but not for any subsequent year).

(iv) Case 2: The facts are the same as in Case 1 except that B had submitted $1000 of reimbursable expenses as of the date of the qualifying event. In that case, the maximum benefit available to B for the remainder of the year would be $1400 instead of $2100. Because the maximum amount that the health FSA can require to be paid for B 's coverage is $1428, and because the $1400 maximum benefit for the remainder of the year does not exceed $1428, the health FSA is not obligated to make COBRA continuation coverage available to B in 2002 (or any later year). (Of course, the administrator of the health FSA is permitted to make COBRA continuation coverage available to every qualified beneficiary in the year that the qualified beneficiary's qualifying event occurs in order to avoid having to determine the maximum benefit available for each qualified beneficiary for the remainder of the plan year.)

 

END REGULATION TEXT

 

Note: Pretty ugly, isn't it? Please let me know if I can be of further assistance.

 

Hope this helps.

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Customer reply replied 4 years ago


W O W -- let me read this . . . it might take a while, I'll get back to you tomorrow.


Thanks

California Employment Lawyer: socrateaser, Lawyer replied 4 years ago
Okey Dokey.
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