Recent guidance provided by the Internal Revenue Service (IRS), Treasury Department, has prompted MSRS to change the definition of a "rehired employee" for the purpose of an HCSP participant's eligibility to request reimbursements. The MSRS Board of Directors has approved this change.
Rehired employee defined
A rehired employee is an HCSP participant re-employed by a previous public employer that sponsored their HCSP and whose status as a terminated employee of the sponsoring employer lasted less than 13 consecutive weeks, or less than 26 consecutive weeks, if employer is an educational organization.
Previously, the break-in-service requirement for all employees was 26 weeks.
Generally, a rehired employee is not eligible to request reimbursement of medical expenses incurred after they return to work. Exception: Participants may be reimbursed with funds credited to their HCSP account prior to January 1, 2014, provided they are rehired in a position that is not eligible for employer-sponsored medical insurance coverage.
What does this change mean to employees?
Employees whose break-in-service with a former employer is 13 consecutive weeks or longer (or 26 consecutive weeks or longer, if employer is an educational organization), are considered a "new" employee when they return to work. A new employee may request reimbursement of eligible medical expenses from the account balance attributed to their previous employment. The account balance attributed to the new employment cannot be accessed until the Participant terminates service.