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Employer Deactivation of FSA Card While Employee Still Covered

Is it legal for an employer to deactivate an FSA debit/credit card while an individual is still covered by the FSA? Deactivating someone's card doesn't seem appropriate as it could potentially restrict their ability to obtain medications that they may not have money to pay for upfront (because they have been diverting money into their FSA) and then submit a claim for reimbursement.
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this question
  • Krista (Customer Experience Manager) June 02, 2017 19:32
    Hi BPYK,

    Yes, it is a legal action to have a card deactivated when a benefit term date is entered into the system. While we understand your concern regarding access to funds, and we do offer the option to claim reimbursements up to the benefit termination date, and that turn around time is within 24 hours. If more information is required, we can be reached at or 303-369-7886.

    Here are the regulations surrounding this action;

    Under the 2007 proposed cafeteria plan regulations, a card must be automatically canceled “when the employee ceases to participate in the health FSA,” thereby allowing card use by former employees who continue to participate in the plan.65 Earlier guidance had contemplated that the card would be “automatically canceled at the termination of employment.” If one had interpreted the Ruling as mandating cancellation of the card upon termination of employment, this would have prohibited use of the card by retirees as well as by COBRA qualified beneficiaries.
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