An employee does not continue to contribute to the plan upon termination of employment. Thus, one could use the entire amount on day one of the plan year, terminate employment on day two of the plan year, and contributions would have been none or negligible (e.g., perhaps 1/26 in the case of biweekly contributions). The "free" money is not taxable because the IRS views these plans as health insurance plans for tax purposes. According to IRS section 125, benefits received from a health insurance plan are not considered taxable income.