Welcome to the “My Life in Benefits” series and thanks for reading. My name is Jon and in these posts, I chronicle my adventures in saving with pre-tax accounts. Up until now, I’ve covered different plans. you can peruse those by following this link.
Before I jump into the pre-tax plan element of this post, I want to make an announcement: I will be starting with a new company in June. I’ve been waiting for this job to open up, so I am looking forward to the change.
I have two main goals during the transition to a new company. One is to ensure that I have continuous health plan coverage. The other is to avoid losing the existing funds in my pre-tax accounts.
I’ve mapped out a plan for each one. I started with my health plan coverage and HSA.
Managing the transition to a new company
Ensuring continuous health plan coverage
Through my current employer, I have four pre-tax plans: a commuter benefit, a Dependent Care account, a Health Savings Account (HSA), and a Limited Flexible Spending Account (Limited FSA). One of these accounts is not like the others. The HSA is the only account with funds that will travel with me to the new job.
One reason I decided to sign up for an HSA in the first place is that I knew my account funds would be transferable to any future jobs.
While I get that the money is mine, I needed a few pointers on the transition. I found out that I will likely have the option to keep my HSA with the current custodian but will be responsible for the monthly fee that my employer was picking up. I also have the option to move my HSA to any HSA custodian of my choosing. Since my new employer also offers an HSA, I am going to sit tight for now and transfer the funds into that account when I get started.
Overall, my HSA money goes with me for the transition. I’m grateful for that, because I’m going to have a gap in coverage for about one month. I will be enrolling in COBRA for one month to ensure I have continuous health plan coverage. I found out I can use my HSA to help pay for my COBRA premium, which is a real help. The HSA will provide a cushion while I wait for my new insurance to start. It’s important to me as a dad to have that buffer in place for my kids, in case of any emergencies.
Thankfully, my new employer offers an HSA option, so I’ll be able to continue funding my HSA.
As for the other three accounts, I unfortunately can’t take them with me. Here’s how I plan to transition to a new company without losing my existing funds.
The plan to avoiding losing funds from my pre-tax accounts
Let’s start with the Limited FSA.
I still have some funds remaining in the account. That initially worried me, until I heard of the option to COBRA my FSA. In other words, I can enroll in COBRA for the month I don’t have coverage. And while I’ll have to pay a COBRA premium, it will help me avoid losing the remaining funds in my account. So, I end up coming out on top, all things considered.
And during that month, I plan to pack in all my expenses to take advantage of the funds that are left. That includes the kids’ eye appointments and a pair of new glasses for myself and Sam (my wife).
Now on to the next plan: the Dependent Care FSA (or Daycare Account, as I call it).
Dependent Care FSA
When it comes to the Daycare Account, it’s not too difficult to use our remaining funds. So far for the year, we’ve only deposited what we needed, which is about $400 a month. That all goes right to paying for the kids’ after school care while Sam and I are at work.
With the Daycare Account, we can’t pay in advance for any expenses that haven’t been incurred yet. In other words, we can’t pay now for the nanny we have starting in June once the kids are out of school.
However, I do have the option of paying for old daycare expenses. We have a pretty generous time frame to submit claims against our April and May expenses. We can submit those during the run-out period my company provides, which is 60 days. That will use up the remaining funds in our Daycare Account.
The CBP is the account I’m least worried about. I had to go to my plan documentation to find the information. (The plan documents are a life saver). Through my current employer, after I leave, I have a period of time after my termination date in which I can use my funds. I simply swipe my card for a few transit passes and I am all set.
Taking the next step
Like I said before, the transition to a new company can come with some challenges. But I have my plan and I don’t expect to forfeit any money as I start my new job.
Have you ever made the transition to a new company? How was your experience different from mine or similar? If you want tips, leave a comment and I’ll respond.
Stay tuned for the next post…