Forma recommends not extending pre-tax coverage, particularly for FSA, LPFSA, Transit, and Parking plans, in order to remain compliant with IRS guidelines, which require coverage to end upon an employee’s termination. Employees who wish to continue FSA or LPFSA coverage may do so through COBRA enrollment, where applicable.
If your organization chooses to offer a coverage extension, your Forma team can assist in enabling end-of-month coverage. This setting can be configured at the individual pre-tax account level (for example, FSA = enabled, Parking = disabled).
With end-of-month coverage enabled, employees are granted a post-termination grace period, allowing them to continue using their Forma Pre-tax Card and incur new eligible expenses through the end of their termination month.
Please note: This feature is not retroactive. If a member was terminated before end-of-month coverage was enabled, they will not be eligible for the extension.
File considerations
For example, John was terminated on April 10th and has an FSA and Transit account. You want to permit John access to both accounts until the end of month, April 30th.
Pre-tax demographic file
- ‘Termination Date’ in the demographics file should be listed as 2026-04-10
Pre-tax election file
- The ‘Account End Date’ field for FSA in the election file should also be listed as 2026-04-10.