dependent care flexible account - missed company's deadline

[Ouvter]

What is the name of your state (only U.S. law)? Michigan

Saw another post about two years old, similar case, don't know the appeal result. So start a new thread. I switched job in the middle of the year, and purchased over three thousand dollars of dependent care FSA from previous employer. Never know the employer's policy for claim window of only 60 days after leaving. Never received any notice from employers to warn the deadline (Not I forgot). We normally claim the spending before March 31 per IRS rule, never missed. Had changed job before too, never encountered this problem. Called previous company's HR, people don't want to help at all. Any one have any idea what can I do next? If appeal, where should I appeal to? Any documents needed? Many thanks!

 

[cbg]

Why did you have no responsibility to ask what their policy was? Why was it okay for you to just assume that the policies were the same everywhere and that everyone else was responsible for making sure you knew the rules?

You wouldn't have gotten a notice that you were reaching the deadline from us, either, and we're one of the most paternal organizations I've ever encountered. We hold our employee's hands to a degree that increases my team's workload by probably a third or more. But there comes a time when we have to let them make their own mistakes and suffer the consequences, and we simply don't have the staff to track every employee who leaves, check to see whether they've utilized their FSA and send them a warning if they didn't. I tell folks occasionally, "There are 18,000 of you and there's less than a dozen of us". I don't know how big your organization is or how much staff your Benefits office has, but I guarantee you it's the same situation. Complaining that they didn't tell you you were reaching the deadline is not going to accomplish anything but make them roll their eyes and be less inclined to cut you any slack.

If you read the other threads you no doubt saw my explanations that FSA's are VERY heavily regulated by Federal law, and that ALL plans eventually get audited. While the employer can decide when they initially set up the plan on when claims must be submitted and what is the deadline date (subject to certain restrictions) once they make the decision and put it into the plan document it is carved in stone; the BEST they can expect if they go against the plan document and it gets caught at audit is that they would be heavily fined. So there is very little incentive for an employer to break the law for you. I have no doubt that somewhere in the materials that you were given when you signed up for the FSA, or in your Open Enrollment materials, or most likely both, is information explaining the policies for filing claims. (It may be on your intranet as well - it's on ours.) I know for certain that that information is in your Summary Plan Description, which is available to you on request.

Okay, so your chances of success on appeal is not great. Paternal as we are, we'd turn you down. (And no, to the poster who I'm sure will be back here making this suggestion and she knows who she is, it's not because the employee keeps the money any more than it's for that reason with the OP's employer. It's because THAT'S THE LAW). And you've got less justification than the poster in the previous thread (at least the thread I remember; I'm sure there is more than one) who was in a situation where the IRS has given the employer clear authority to make the correction if they choose to. They are not required to, but in his situation the IRS has agreed it's okay. You don't have any such justification. "Nobody told me" isn't going to get you anywhere with the IRS. There's no exception in the law for your situation the way there was for him. You are, frankly, dead in the water as far as any legal protections go.

I'm telling you all this so that you know that you are not coming from a position of strength; in fact I've seldom seen a poorer. If you are going to get anywhere on appeal, it's going to be because your employer makes a choice to violate their plan document, which means they are, in fact, violating the law for you. So I don't recommend going in with guns blazing and complaints that they did things wrong by not taking responsibility to see that you did everything you're supposed to. It wasn't their responsibility, and the law isn't going to make it theirs. It was yours, and you goofed. If you're going to get anywhere at all, IMO it's going to be by being very conciliatory, admitting that you were at fault, and humbly asking for help. I'd go heavily on the fact that all your previous employers have had the policy of going straight to the end of the year, and that you mistakenly assumed that it was the same with this employer. You realize that you should have confirmed this without making assumptions, and are now politely requesting that they see whether they can see their way clear to helping you out.

Don't expect much.

 

[Ouvter]

I learned from this big lesson, but the point is I can't ask something that I don't know I need to ask. I am not a careless person, I know the IRS deadline and never missed it. Just can't imagine each employer has their own deadlines. Nobody know every detailed policies. HR people are really the expert on this policies and should remind employees in some kind warning. What you said is just like a physician blaming a patient's sickness is because of their own irresponsibility of taking care of themselves and a police officer blaming the victim that the crime is because of the victim didn't do enough self protection. If it is all like this, why we need specialized professionals? Don't want to argue with you and thanks for your information.

 

[cbg]

See, you're making another incorrect assumption there. If your understanding is that the IRS has set March 31 as the deadline date for all FSA claims, your understanding is mistaken. A plan with a calendar year plan year and a 90 day run-out would have a March 31 deadline, yes. But not all plans are calendar years and the 90 day run-out is not set by law. Once again, that is set by the plan document. If the plan document has a 120 day run out or a 180 day run out period, then the deadline date would be different. 90 day run-outs are common. They are not mandated, and they are not set by the IRS. They are set by the employer.

I work in the Benefits office of a major university in the NE. I have almost 40 years experience in employer benefits. Never, from the smallest mom-and-pop firm to my current employer, has there ever been an expectation that HR will follow all terminated employees to ensure that they get their FSA money back. Where I am currently, we don't even know you've left unless you call and tell us; there are just too many employees coming and going for us to tag them all. At some point, they need to take responsibility for their own benefits, pick up the phone, and ASK.

So you're basing your entire argument on an incorrect assumption. Fine by me. Good luck with your former employer. Sorry about the $3000 you're not going to get back.







(Regular posters - stand by for the OG effect)

 

[Just Blue]

See, you're making another incorrect assumption there. If your understanding is that the IRS has set March 31 as the deadline date for all FSA claims, your understanding is mistaken. A plan with a calendar year plan year and a 90 day run-out would have a March 31 deadline, yes. But not all plans are calendar years and the 90 day run-out is not set by law. Once again, that is set by the plan document. If the plan document has a 120 day run out or a 180 day run out period, then the deadline date would be different. 90 day run-outs are common. They are not mandated, and they are not set by the IRS. They are set by the employer.

I work in the Benefits office of a major university in the NE. I have almost 40 years experience in employer benefits. Never, from the smallest mom-and-pop firm to my current employer, has there ever been an expectation that HR will follow all terminated employees to ensure that they get their FSA money back. Where I am currently, we don't even know you've left unless you call and tell us; there are just too many employees coming and going for us to tag them all. At some point, they need to take responsibility for their own benefits, pick up the phone, and ASK.

So you're basing your entire argument on an incorrect assumption. Fine by me. Good luck with your former employer. Sorry about the $3000 you're not going to get back.







(Regular posters - stand by for the OG effect)

With taco's on the side a she is in Mexico.

 

[cbg]

Oh, I know she's not around just now, but OG need not be present for the OG effect to occur.

 

[Ouvter]

If I had knew all of this details, I would be a forty years experienced HR benefit officer myself. Yes it is the rule, but the rule may not be reasonable and need improvement. If you see all of the cases people lost their big money due to the unknown deadline, it is a shame on the rule. Why leaving employee receive Cobra medical insurance letters after leaving all the time but can't get a letter regarding this information? I think it is a big loophole when the rule was made. Or maybe it is on purpose and let companies make money out of this situation.

 

[eerelations]

The IRS made a law (not a rule, a law) because it wanted companies to make a little extra cash? Really?

 

[cbg]

It's a two way street; employees with a health FSA who have drawn out more money than they have had deducted don't have to pay it back - the employer has to eat the difference.

Yeah, I get that you want it to be someone else's fault. You've made that quite clear. But this is one time I refuse to take responsibility on behalf of HRs everywhere. I have employees every day calling to say, "My last day with (university) is Friday - what should I know about my benefits?" And when they do that I am more than happy to tell them everything they need to know about their benefits, including how long they have to utilize their FSA. Those people are taking some responsibility for themselves and not assuming that it's all up to someone else to do the work.

As I said before, I am willing to bet folding money that the information about when to submit the claims is somewhere in the information you received, either at hire, at Open Enrollment, on the Benefits page of your company's website, or in your COBRA information - you know, all that stuff you were given but didn't read other than maybe a cursory look at the COBRA prices? For that matter, if your FSA is outsourced, you likely get statements periodically - ours does so each quarter - with that sort of information. But we can only provide you with the information - we can't make you read it. And that, by the way, is a frequent cry of frustration for Benefits folk. There are times when I've had employees like you whining that no one told them (something) and I've been able to point to as many as four places that it was made available to them, if only they looked at what we sent them.

Maybe you're not getting it because you've never worked in an Benefits office and don't know how they operate. But we don't get lists of people who have left every day/week/month/pay period; your status is updated in the computer system when your department gets around to it (which is often much later than we would like it to be) so that it's available to us if we need it. And our Operations team will put together electronic files of employment status changes which get transferred to the appropriate vendors so that they know, for example, to send out the COBRA information which is required by law. But logistically it's simply not reasonable to expect us to somehow manage to track down each employee who leaves to warn them that their 60 days (or whatever) is almost up and they need to get their claims in.

I've told you what, IMO, will be the best way for you present your appeal. You don't want to do it that way because it would mean acknowledging that maybe it was up to you to ask and not their responsibility to chase you down. Keep this in mind; other people who left the company managed to find the information as to when the claims were due - people who had access to no different materials (and telephone numbers) that you did. How did they find out? No one chased them down; no one gave them a personal phone call or letter spelling out. What did they do, and why couldn't you do the same thing? Somehow the information was available to them, and I guarantee it was also available to you. You just didn't read it; you assumed you already knew it all.

So there you have it.

 

[eerelations]

It's a two way street; employees with a health FSA who have drawn out more money than they have had deducted don't have to pay it back - the employer has to eat the difference.

Yeah, I get that you want it to be someone else's fault. You've made that quite clear. But this is one time I refuse to take responsibility on behalf of HRs everywhere. I have employees every day calling to say, "My last day with (university) is Friday - what should I know about my benefits?" And when they do that I am more than happy to tell them everything they need to know about their benefits, including how long they have to utilize their FSA. Those people are taking some responsibility for themselves and not assuming that it's all up to someone else to do the work.

As I said before, I am willing to bet folding money that the information about when to submit the claims is somewhere in the information you received, either at hire, at Open Enrollment, on the Benefits page of your company's website, or in your COBRA information - you know, all that stuff you were given but didn't read other than maybe a cursory look at the COBRA prices? For that matter, if your FSA is outsourced, you likely get statements periodically - ours does so each quarter - with that sort of information. But we can only provide you with the information - we can't make you read it. And that, by the way, is a frequent cry of frustration for Benefits folk. There are times when I've had employees like you whining that no one told them (something) and I've been able to point to as many as four places that it was made available to them, if only they looked at what we sent them.

Maybe you're not getting it because you've never worked in an Benefits office and don't know how they operate. But we don't get lists of people who have left every day/week/month/pay period; your status is updated in the computer system when your department gets around to it (which is often much later than we would like it to be) so that it's available to us if we need it. And our Operations team will put together electronic files of employment status changes which get transferred to the appropriate vendors so that they know, for example, to send out the COBRA information which is required by law. But logistically it's simply not reasonable to expect us to somehow manage to track down each employee who leaves to warn them that their 60 days (or whatever) is almost up and they need to get their claims in.

I've told you what, IMO, will be the best way for you present your appeal. You don't want to do it that way because it would mean acknowledging that maybe it was up to you to ask and not their responsibility to chase you down. Keep this in mind; other people who left the company managed to find the information as to when the claims were due - people who had access to no different materials (and telephone numbers) that you did. How did they find out? No one chased them down; no one gave them a personal phone call or letter spelling out. What did they do, and why couldn't you do the same thing? Somehow the information was available to them, and I guarantee it was also available to you. You just didn't read it; you assumed you already knew it all.

So there you have it.

Like button.

 

[Ouvter]

The IRS made a law (not a rule, a law) because it wanted companies to make a little extra cash? Really?

Over theee thousand dollars is absolutely not a little cash. It is all my hardworking money and it is taken away too easily by somebody. You can't deny that some laws are made with loopholes on purposes, that is how top 1% rich people pay less tax rate than middle classes.

 

[cbg]

Well, since the employer stands to lose money based on the same rule, I think we can safely assume that this one was not. That it was you that lost money in this case doesn't mean that the law was rigged against you, deliberately or not.

 

[Ouvter]

It's a two way street; employees with a health FSA who have drawn out more money than they have had deducted don't have to pay it back - the employer has to eat the difference.

Yeah, I get that you want it to be someone else's fault. You've made that quite clear. But this is one time I refuse to take responsibility on behalf of HRs everywhere. I have employees every day calling to say, "My last day with (university) is Friday - what should I know about my benefits?" And when they do that I am more than happy to tell them everything they need to know about their benefits, including how long they have to utilize their FSA. Those people are taking some responsibility for themselves and not assuming that it's all up to someone else to do the work.

As I said before, I am willing to bet folding money that the information about when to submit the claims is somewhere in the information you received, either at hire, at Open Enrollment, on the Benefits page of your company's website, or in your COBRA information - you know, all that stuff you were given but didn't read other than maybe a cursory look at the COBRA prices? For that matter, if your FSA is outsourced, you likely get statements periodically - ours does so each quarter - with that sort of information. But we can only provide you with the information - we can't make you read it. And that, by the way, is a frequent cry of frustration for Benefits folk. There are times when I've had employees like you whining that no one told them (something) and I've been able to point to as many as four places that it was made available to them, if only they looked at what we sent them.

Maybe you're not getting it because you've never worked in an Benefits office and don't know how they operate. But we don't get lists of people who have left every day/week/month/pay period; your status is updated in the computer system when your department gets around to it (which is often much later than we would like it to be) so that it's available to us if we need it. And our Operations team will put together electronic files of employment status changes which get transferred to the appropriate vendors so that they know, for example, to send out the COBRA information which is required by law. But logistically it's simply not reasonable to expect us to somehow manage to track down each employee who leaves to warn them that their 60 days (or whatever) is almost up and they need to get their claims in.

I've told you what, IMO, will be the best way for you present your appeal. You don't want to do it that way because it would mean acknowledging that maybe it was up to you to ask and not their responsibility to chase you down. Keep this in mind; other people who left the company managed to find the information as to when the claims were due - people who had access to no different materials (and telephone numbers) that you did. How did they find out? No one chased them down; no one gave them a personal phone call or letter spelling out. What did they do, and why couldn't you do the same thing? Somehow the information was available to them, and I guarantee it was also available to you. You just didn't read it; you assumed you already knew it all.

So there you have it.

I don't know people can ever claim more money than they put in their FSA. Don't know, maybe it is another piece for knowledge I don't know the details. But at least I have never done it.

My post is to find some advice about any possibility to get my money back, not blaming anybody. I respect you as a very responsible HR officer to offer details to your employees if they ask. Unfortunately, not every HR person are as responsible as you are. I have had asked them my medical insurance coverage before I left, and they told me it was active till end of the month. However, it is was actually terminated the day I left. My whole family basically had no insurance for almost a month. Luckily, nothing bad happen for that month.

Also, what is IMO? I am not HR person, there are so many details I don't know and you may think I should have known. Thanks!

 

[cbg]

IMO - In My Opinion

There are two types of FSA's - dependent care and health. In a dependent care FSA, IRS regulations do not allow you to claim money until it has already been deducted from your check. (Query - had the full $3000 already been deducted? It should have been divided into however many paychecks there were left in the calendar year from when you made your election, and one portion deducted from each paycheck.)

On a health FSA, while the deductions are made the same as I've described above, you can claim the entire amount you elected for the year, the very first day of the plan year if you want to. You then essentially repay your account as you go through the year. However, if you've claimed more than has been deducted from your paycheck when/if you leave, that's just too bad for the employer; they can't ask for the money back. Health FSA's are also use it or lose it - if you don't submit your claims on time, the money is gone. The law was written with the use it or lose it provision being both ways on purpose.

By the way, I'm not saying that you should have known what the policy was. I'm saying it was your responsibility to ask rather than assume. You decided that you knew what the rules were and you were wrong. You were wrong about March 31 being an IRS deadline and you were wrong that all plans have the same rules on termination. But if you had asked you would have been told (and if you had asked and had been told wrong, you'd have some legal justification on appeal). You didn't ask; you got it wrong; you didn't read what you were sent, and you ended up on the wrong side of IRS regulations. The employer is in a much stronger position legally in denying you, then you are in saying, "No one monitored my account and sent me a follow up so I wouldn't have to pay any attention to dates and deadlines". Because one thing I will promise you, if you try to claim you weren't told, they will be able to produce evidence that you were. Because, and this is what I was trying to get at, you cannot possibly be the first employee to leave the company with an FSA balance, and somehow all those other employees got their claims paid. So either the information was written down in a place they had access to (which means you also had access to it) or they had the sense to call and ask. It would surely incite remark (and IRS investigation) if no one was getting any claims paid after termination, so I think it's a fair bet that you're the exception rather than the rule.

I know you are looking for someone to say, "Tell them this and they'll have to give you your money back". I've already told you the best possible way you can do that and you don't want to do it that way. Please pay attention here. I'm going to say this once more.

You are in a bad position here. The law is on your employer's side, not on yours. For your employer to "help" you would involve their having to violate the law on your behalf. They have no incentive to do anything to help you in this instance. They are legally in the right and you are legally in the wrong. There IS no magic wording that you can use, or law you can invoke, or arguments you can muster, that will guarantee you a win. If you are determined to appeal, all you can do is make the best plea you can, NOT by putting responsibility on them, which is only going to put their backs up, but by taking responsibility on yourself, which is where it belongs and may make them look at you in a kinder light.

Now, let's talk about your health insurance, since you say you did call about that. When did you call, what were you told, what was your last day of work and what was the last day your insurance was in effect? Did you receive your COBRA notice and if so, when?