Flex-Account Options When You Leave Your Job

What happens to the $1,000 I already put in my flexible-spending account for this year? I got laid off with one day's notice and had no medical bills for which to be reimbursed. Does my company have the right to keep the flex-plan money, or will I get it back?

Normally, you lose any flex-plan money you haven't used when you leave your job. But you can buy extra time, if you know how to ask for it.

First, find out whether your employer will give you until the end of the month to use the money. That's an option under some employer plans, says Sharon Cohen, group and health-care benefits counsel for Watson Wyatt.

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Or gain more time by signing up for benefits under COBRA –- the same federal law that lets employees keep group health insurance for up to 18 months after they leave their jobs. Most companies with 20 or more employees are required to offer COBRA coverage, which also applies to money in flexible-spending accounts. You don't have to use COBRA for health insurance to have a COBRA flex plan.

To keep your FSA open, you would continue making the same monthly contribution plus a 2% charge –- so if you signed up to have $100 per month deducted from your paycheck, you'd pay $102 per month and still have access to your FSA, says Brandon Wood, director of health-care product management for WageWorks, which administers employer health plans.

Then you can pay for COBRA for just a month or two while you get back your money. You'll be able to use $100 of the monthly COBRA charges, as well as the $1,000 you already contributed, for medical expenses.

You can use FSA money for eyeglasses, contact lenses, prescription and many nonprescription medications, dental care and a lot of other medical expenses that aren't covered by insurance. For more information about uses for your flex plan, 25 Ways to Spend Your Flex Account.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.