Section 125 - Missing deductions

DB

I know when an employees enrolls in the medical reimbursement program, collects all of the reimbursement in February and leaves the company in March, we are stuck with the loss. The twist here is the employee is on an unpaid medical leave so instead of 26 payroll deductions she will only have 20 or 21. She will return to work about Dec 15.

Do we have to give her the full amount for the year or can I just reimburse her the actual amount she will have deducted?

I'm reading the plan document but it's slow going.

Down_the_Middle

It's an annual election amount that you'll be held to.
Btw, the requirement that the employer reimburse for the entire annual amount is the quid pro quo for use-it-or-lose-it and have the dollars return to the employer. Congress attempted to balance these issues w/this feature.

irenesmsaclaims

When you look at the SPD, the section called "contributions" should list three options for contributions during a leave of absence. The plan should choose one or two of these, and some of them are mutually exclusive. They can pay as they go, or catch up, or pay ahead. This would save the employer from losing during a leave, and not be subject to the payout without contributions trap. Let us know more details.