Less than a year after signing a contract with Yale, ERN Holdings, Inc. — a Fort Worth, Texas-based benefits outsourcing firm — informed the University Oct. 15 that it will no longer process benefits repayments for Yale employees.

The 22-year-old company, which had administered Yale’s Flexible Benefits and Transportation Flex programs, ceased all operations Oct. 14.

Under the programs, employees requested tax-free payroll deductions; they could then use the money withheld toward expenses such as childcare and commuter parking. ERN administered the reimbursements to employees, but has not done so since it ceased operations.

The University had administered the program until January, when it transferred the responsibilities to ERN. Following ERN’s demise, Yale has reassumed responsibility for the program. Yale spokesman Tom Conroy said the University may choose to hire another company in the future.

Conroy said the program is open to all of Yale’s 11,000 employees, of which 2,000 were participating in the program.

ERN was used to process claims and reimbursements. In addition, ERN offered the SmartFlex VISA card. The card, which functions like a debit card, allows employees to pay for costs without using cash or checks.

Yale President Richard Levin said he was disappointed with the company’s closure but added that employees would not incur any losses because of ERN’s announcement.

“Our employees — will get all the reimbursements they’re entitled to,” Levin said.

Conroy said many employees may not be affected at all by the change, while those who were claiming a reimbursement at the time of ERN’s announcement may incur a “slight inconvenience.”

The Benefits Office sent an e-mail and a written letter Oct. 15 to all employees enrolled in the program. The office is planning to send a follow-up letter Oct. 25.

Most employees contacted said they were not aware of the change.

Jeffrey Larson, librarian for Romance languages and literature, said he received the e-mail but did not think it was sufficient.

“I called [on Wednesday] and the man who answered the phone was very defensive,” Larson said. “I don’t think the explanation they gave to me was sufficient. Maybe that’s all the explanation they have.”

Benefits Office Director Kenneth Korsu declined to comment.

Currently, employees who call the Benefits or Parking and Transit offices are being told to make Flex-eligible payments with cash or check.

“I’m telling [callers] to purchase their parking and their transit themselves — and retain their receipts,” said Joan Carroll, manager of the Yale Parking and Transit Office.

In the Oct. 15 e-mail, Korsu wrote that while employees are currently being told to hold claims until further notice, those employees incurring “undue hardship” may submit a claim to the Benefits Office for immediate reimbursement.

ERN recently shut down its hotlines for both employers and employees, and calls to both numbers were met with a recorded message.

“ERN is no longer processing benefit claims for flexible spending accounts, transportation, COBRA, or insurance benefits. Please contact the [Human Resources] department at your company for any question,” the recording said.

Conroy said the University’s decision to switch to ERN was based on the conclusion that the program would be administered in a more efficient way.

“Any large institution — is going to have a mixture of in-house staff to administer operations — and outside hiring,” Conroy said.

But under the Yale-administered program, employees did not have the option of using SmartFlex cards. Since ERN’s closure, the University has advised employees not to use the cards at this time.

“All attempts to process claims in this manner will be rejected,” Korsu wrote in the Oct. 15 e-mail.

Conroy said that, though the program will no longer be administered by ERN, it will remain essentially the same under the University’s supervision.

“It’s not something the University had not done before,” Conroy said.