$833 Profit from Dependent Care Flexible Spending Account
Many of you know I signed up for flexible spending account (FSA) for the year 2005, and was quite happy about getting an interest-free loan from Microsoft for our day-care expenses. Good news keeps coming: I actually made a $833 profit from signing up for the account last year, at least by now.
How come?
Here is the storyline: I signed up for an annual contribution of $5,000 to the dependent care FSA (a monthly contribution of $416.67). Before the end of June, I received full reimbursement of $5,000 for my son's day care bills running at about $900/month. Then I moved to Asia in November, which means I technically left the U.S. subsidiary and therefore ineligible of contributing to FSA. The result: I didn't make my November and December contribution, and therefore make a profit of $833.
I explained in my previous post about FSA that this kind of "uniform reimbursement" is not mandatory for dependent care FSA, and company offering this feature is exposed to credit risk:
"... if an employee leaves the job within the year, and claims all his FSA elected amount beforehand, employers will have a hard time getting the uncontributed money back."
So far, I haven't heard from our U.S. benefits department about paying back the money. Am I luck or will the bill finally come? As of now, I'm keeping this $833 in my accounting book as liability. Let's see how it goes from here.
Many of you rightfully pointed out that income statement is a noticeable missing component of this 3-year-old personal finance blog. Being a corporate finance professional, I do agree that financial disclosure, no matter a personal one or corporate one, is always incomplete without income statement ... Read
With my moving day looming, time becomes the most precious resource in my life. It is without exaggregation that the last several weeks, especially starting October, are my busiest time in the last several years. Literally, there were a thousand moving parts in my life ... Read
I really doubt you'll get a bill, I asked my HR person straight up about this, and she said that was just part of the system. It's the flip side of the "Use it or lose it" nature of FSAs.
Think of it this way - you just got the money of somebody who didn't fully take advantage of the FSA money they committed. =)
This happened to us once in the past, and I never heard a word about it. We ended up 'earning' something like a thousand dollars. Don't feel too bad, though... They'll more than make up for it with the dollars that other people forfeit at the end of the year.
--dad
I agree. Did the same thing when I left my last job. Your previous employer CAN ask you for the money back but you are in no way obligated or required to give the money back.
My understanding is that for a medical FSA the company can only 'ask' for the $$ back.
