My severance ends this spring and I typically do an FSA. Do they claw back the amount that won’t be taken from my checks? How long do I have to use the funds after my severance ends? I had assumed I had the calendar year to use it but retirees told me that they only have a short time to use it all. Thanks!
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the first answer is correct answer.... elect maximum, spend maximum before end of severance and you can claim it even though you didn't pay in full amount.
Don't cry for WF "eating" the cost, the fact is that every year some people don't claim their FSA benefits by deadline and they are forfeited by the individual. so those unclaimed/forfeited funds then offset something like OP situation
FSA is not same as HSA so lots of incrorrect answers on this thread. HSA works differently.
Had the HRA during severance and spent the entire balance by March 30.. I was never contacted or approached for clawback
@dh I would make a friendly amendment. The spending has to happen by the severance date but the claims for reimbursement can happen afterward. My notes say I’d have had even until the claim deadline everybody else has the following year, but don’t quote me or somebody else clarify.
@dn
Not everyone or every plan qualifies for HSA!
Also, lesson learned, next time do the HSA. Job changes have no significant impact.
by law, they cannot ask you for what you already spent even if your contributions did not reach that amount yet. However, whatever is leftover the midnight your severance ends will vanish at 12:01AM. In other words, if you spend the entire thing before your severance ends...they can't ask you back for it. Get your annual exam, blood reports, eye, dental etc. done...buy FSA elegible supplments, get all prescriptions renewed and filled for 90 days
(not at Wells Fargo, speaking from general experience)
Finally, a good post. Can someone explain how to do this?
Sounds like you know you can do FSA in ‘27. As mentioned priorly there is this nutty loophole in FSAs where you can claim up to the amount of a full year of your set-aside. The savvy player will go for the max set aside ($3k+). In your case you’ll only do ~$1K of contribution. The trick is how to get $3K in expense or receipts by the time your severance ends. Look up the IRS “Uniform Coverage Rule”. Stick it to the stagecoach!
so i had severance ending in april of 22. i signed up for the max fsa amount in 21 for 22. i had lots of eligible medical bills thru april. they payed out the yearly max even though i had not payed in for the full year so wells ate 8 months of cost. the key is you can only claim expenses incurred through the end of severance period.