Kathryn Bakich, national health care compliance leader for the Segal Company, a leading benefits consulting firm:
"As long as the person is an employee and claims are submitted during the Flex plan year, the employee is eligible for the full amount of the flex-spend election, not just the amount of the contributions made to date. This, says Ms. Bakich, is known as the universal coverage rule. It is the flip side of the “use it or lose it rule.” That’s the rule that says you have to forfeit funds in your Flex Spending Account if you have withheld more than you actually spend on eligible health care expenses.
At the same time, companies must still reimburse a laid-off worker for the full amount of their planned contribution, even if they haven’t contributed the total amount before their last day of work. Let’s take your example. You elected to contribute $3,000 to your F.S.A. account. At the time of your layoff, you had contributed only $500, however you had already incurred eligible health expenses of $2,000. If you submit those medical claims while still employed, the company must pay you the full $2,000. The $1,500 cannot be deducted from your severance. (If the claims are incurred after employment terminates, however, they would not be eligible for reimbursement.)"