Health Care FSA and Bankruptcy

Human Resources Manager

[font size="1" color="#FF0000"]LAST EDITED ON 06-28-04 AT 09:48AM (CST)[/font][br][br]Does anyone know what becomes of a health care FSA balance if the enrollee declares bankruptcy, and is no longer responsible for paying his medical bills? Is it forfeited or can he withdraw the funds?
I wasn't able to find anything in our plan documents about this, and so far haven't found anything pertinent online. Any insight that you might be able to supply would be greatly appreciated.

marc

This may not get you much closer, but in general, all assets are to be listed, along with all debts, in a bankruptcy. This disposition of the assets is determined by the bankruptcy judge.

lnelson

I would think that the ee would still be able to submit medical bills for reimbursement if funds are still in the account. They would only be forfeited if plan year ends and they were not paid out.

Unless Bankruptcy is a qualifying status change under your policy then that would be different story.
But most likely the FSA would not have the bankruptcy on file and the ee signed on for the full year deductions which still need to be taken out of his payroll check any medical bills he incurrs can still be submitted for reimbursement to the ee.

JMO,
Lisa