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Employee Terminations

When an employee terminates during the Plan Year, several steps should be followed. If the terminating employee has pre-tax benefit elections through the flex plan, a Status Change Form should be completed and returned to ProBenefits promptly.

If the terminating employee has a Flexible Spending Account (and especially if he/she has a Flex Debit Card), it is essential that this form be returned to ProBenefits quickly to avoid errors in reimbursement.

Medical/Dental/Vision Care FSA Participants

  • Provide Election Notice (for Medical FSA only) if you are a COBRA-compliant employer. (See our COBRA Compliance section.)
  • Provide a Certificate of Creditable Coverage (for Medical FSA only) if your Flex Plan qualifies under HIPAA as requiring issuance of such a "CCC" to terminating employees. (See our HIPAA Compliance section.)
  • If you are a COBRA-compliant employer, offer the employee an opportunity to use the flex plan to pre-pay COBRA continuation premiums from the final paycheck on a pre-tax basis.

If there are questions about how to handle flex plan benefits upon termination of employment, please feel free to contact us.

Related items

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    Employers whose plans include FSAs should establish a checking account in the bank of their choice to serve as a "benefits" bank account.

  • Key Processing Dates

    Here's a quick reference to help you keep track of our schedule.

  • Legal Compliance

    Federal law requires your company to comply with IRS regulations on proper documentation and reporting.

  • Discrimination Testing

    A Flexible Benefit Plan may not discriminate in favor of key employees or highly compensated employees (see definitions below).

  • COBRA Compliance

    Learn how COBRA laws apply to your Flexible Benefits Plan.