If a participant does not use all of his expenses during a plan year, can an employer simply reimburse the participant for any unused expenses?
A. No. Arrangements formally outside of the Cafeteria Plan that provide for the adjustment of a participant’s compensation or a participant’s receipt of any other benefits on the basis of the expenses incurred or reimbursements received by the participants will be considered in determining whether the reimbursements are provided under a benefit eligible for the exclusion from income tax. (Reg. Sec. 1.125-1 Q&A 17 and 18) Q.
Related Questions
- If a participant does not use all of his expenses during a plan year, can an employer simply reimburse the participant for any unused expenses?
- My spouse has health benefit coverage under her employer. Can I deduct the eligible expenses that are not covered by her plan under my PHSP?
- What happens to any unused contribution? Why can the participants get a refund of their unused contributions at the end of the Plan Year?
