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Explanation of Terminated Employee

Do you have participants asking you about their accounts after they terminate employment? As the plan administrator, here is what you will want to know about this process.
Written by Michele Lombardo
Updated 2 months ago

Once a participant terminates, their Ameriflex debit card will be deactivated on the termination date you entered in your Ameriflex account. This will ensure that participants do not use the account for expenses incurred beyond the termination date. 

With the exception of commuter accounts (parking and transit) and health savings accounts (HSA), all terminated participants are given a run out period for their plans.

Run out periods provide extra time for participants to get reimbursed for qualified expenses incurred during employment. This can be applied to flexible spending accounts (FSA), limited purpose FSAs, dependent care FSAs, and health reimbursement arrangements (HRA). For example, if a terminated participant’s run out period lasts until March 31, they can file claims up to that deadline for expenses that were incurred before they were terminated.

Click here to confirm the length of your run out period for terminated employees. 

Once the run out period expires, the participant’s account will be fully terminated, and all remaining funds will be forfeited to the employer.

Ameriflex is here to help you when it comes to navigating your plans with regards to furloughs and layoffs with more specific details on how employees’ accounts should be updated and what should be communicated to terminated/laid off employees.

As a reference point, the process for an employee placed on furlough is treated similar to a Leave of Absence (LOA), while the process for layoffs or workforce reduction is treated like a termination of employment.

Here are some important points below for your reference:

Flexible Spending Accounts (FSA)

  • If the employer decides to continue FSA coverage, Ameriflex will keep accounts active. MyAmeriflex card transactions will continue to approve, and payroll contributions will post to the account. Any non-card claims incurred before the furlough start date can be submitted manually during the furlough period.
  • If the employer decides to discontinue FSA coverage, Ameriflex will set accounts to a terminated status. This will prevent employees from accessing funds for claims incurred after the furlough start date. Employees can submit claims manually for any claims incurred before the furlough start date. Employees should hold onto their debit cards, as they can use them again when the furlough ends.

Dependent Care (DCA), Transit (TRN), and Parking Accounts (PKG)

  • If employees are no longer contributing to these accounts due to a furlough, their contributions can be stopped and the accounts can be left active for use once the employee returns to work. Employers can make updates to employees’ contribution amounts by logging into our Account Management Portal and using our employer portal tutorial to help guide you through our system to change contribution amounts to $0.00.
  • If an employee is being terminated or laid off, please visit our Account Management Portal and use our employer portal tutorial to help guide you through how to terminate an employee.

Health Reimbursement Accounts (HRA)

  • HRAs will likely continue during furlough, as they traditionally integrate with medical coverage.
  • HRA coverage is generally self-insured without stop-loss, so employers won’t need approval to continue offering coverage. Accounts will remain active to allow employees to submit claims and use their MyAmeriflex card (where applicable) for eligible claims.

Health Savings Account (HSA)

  • No changes to the employee’s account are necessary when furloughed.
  • If an employee is being terminated or laid off, please visit our Account Management Portal and use our employer portal tutorial to help guide you through how to terminate an employee.

Related Articles:

Terminate a participant

Can I return any account balances to the terminated employee?

View run out period length

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