Overdrawn Medical FSA on mid-year Separation

[phildonnia]

Our Medical FSA allows us to spend from the entire year's benefit, even before that amount is fully deducted from pay. 

Technical question first:

What typically happens when you quit halfway through the year, having spent the entire amount?  Do they write it off?  Or do they deduct the rest from your final pay?

And the Moral question:

If they write it off the is it OK to plan to take advantage of that?

[DeniseNJ]

You get to keep it and yes it's perfectly moral as that is how they wrote the rule and if you hadn't spent it you would not be getting it back.

[frugalnacho]

Yes it's your money.  You could spend it all on Jan 1 and quit on Jan 2 without ever actually having anything deducted from a paycheck.  If you contributed all year, but didn't use the money, you would lose the entire balance (less whatever they allow to roll over), and if you quit with a large balance (that all came out of your paychecks) you would forfeit that money.  This is just the other side of that coin.

Yes it's ok to take advantage of that IMO.  They wouldn't have any problem forcing you to forfeit unused funds at the end of the year or upon you quitting as per the rules, so I don't see any problem with you using the full balance before quitting, exactly as per the rules. 

Enjoy your free FSA bonus.