If an FSA provides health benefits (like medical or dental expenses) to participants, it must be ready to pay the full year's benefits to an employee who qualifies for the benefit.
For example, if the employee has contributed for only one or two months at the time of the claim, the employer must pay for the entire expense up to the amount projected for the full year of contributions by the employee.
If the employee then terminates employment before the amounts are deducted from his or her paycheck, the employer must suffer the loss.
Note: These restrictions apply only to medical expense benefits
FSA (Flexible Spending Accounts)
This document was last modified on July 26, 1999
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