TPA paid out funds for orthodontia down payment based on estimated fee schedule, employee terminated a few months later, plan year has now ended. It was discovered that the orthodontia treatment was delayed and the down payment never used. Are these funds recoverable, and what is the proper method to recover the funds? Thank you.

Sounds like an E & O issue to be discussed with your TPA. Reimbursements are only to be made for service rendered, not on estimates in advance of service.

Wouldn't you also need to issue a 1099 (or include the amounts in the person's W-2) as a result of the improper payment?

Also, don't you have an obligation to withhold FICA and FUTA with respect to the improper payment?