Updated on March 27, 2014
Q) I am a state employee going on an unpaid leave of absence. How does this affect my Flexible Spending Account benefits?
A) When you go on an unpaid leave of absence, you have three options for your Health Care Spending Account (HCSA) benefits:
- You may have the deductions for the unpaid leave taken on a pre-tax basis from the last paycheck prior to your leave providing there are sufficient funds for the deduction. When you elect this option, you may continue to submit HCSA claims for reimbursement and to use your HCSA debit card for eligible expenses during the unpaid leave of absence.
- You may decide not to contribute while on an unpaid leave of absence. When you choose this option, any claims submitted for reimbursement and any payments made with the HCSA debit card will be denied.
- You may choose to contribute to the HCSA account on an after tax basis. Be sure to notify your payroll coordinator and Benefit Strategies to set up this option. When you elect this option, you may continue to submit HCSA claims for reimbursement and use your HCSA debit card for eligible expenses during the unpaid leave of absence. However, there are no tax benefits with this option.
Expenses incurred while on the unpaid leave of absence are not eligible for Dependent Care Assistance Program (DCAP) reimbursement unless you are disabled and unable to care for a child.
Q) I am leaving state service. What happens to my Flexible Spending Account benefits?
A) Participation in HCSA and DCAP will terminate as of midnight the day of termination from state service. You may submit claims for eligible health care expenses incurred on or before the last day of active employment, but will be unable to use your HCSA debit card. If you would like to use the HCSA account after your termination, you may elect HCSA COBRA by making direct payments on an after-tax basis; you must elect this option within 60 days of the date that you leave state service. There are no tax benefits with the HCSA COBRA option, but this option allows you to have access to your remaining balance upon termination. See forms for this HCSA COBRA form.
For DCAP, if you have a remaining balance in your account when you terminate state service, you may file claims for eligible dependent care expenses and be reimbursed until your balance is exhausted. Claims can be files with dates of service through the end of the plan year.
This information provided by the Group Insurance Commission.