JACKndERISABox

Lets assume employer has 100K in Health FSA forfeitures fro the applicable year. As I understand it, to the extent forfeitures represent "experience gains," the section 125 rules and ERISA would regulate what an employer can do with the forfeitures (i.e, defray plan expenses, reduce EE salary reductions for the following PY or refund). Lets assume now that the loss experience (i.e., the amounts the employer ate in overspent accounts relating to mid-year terms) is 95K resulting in net experience gains of 5K. lets assume further that the admin expenses for the Heath FSA for the applicable year are 5K. 5K out of the 100K in gross forfeitures is eaten up by the admin expenses leaving gross forfeitures of 95K, which after applying the the experience loss results in 0 net experience gain for the applicable year. Does that mean that the employer can use the 95K in forfeitures (i.e, net forfeitures after deducting the 5k in admin expenses) as its sees fit (even for paying expenses for unrelated benefit plans) since there are no experience gains? Brian, thoughts?

Is it possible for a plan to provide for both the 30 day retro initial election window and for those who do not make a time election also offer an extended enrollment period for up to, say, an additional 30 days to initially enroll on a prospective basis? Put another way, the plan would provide a 60 day initial enrolment window with those diligent EEs electing to enroll within 30 days of DOH retro coverage to DOH. The rules do not say if this is allowed or if use of the retro option excludes the prospective option. Of course, any such provision would be applicable to all new hires so there should be no discrimination issues involved. Brian Gilmore any thoughts?

HSAs are generally not considered a group health plan so I think offering an HSA would not result in a violation of the QSEHRA rules. Employees can only make pretax contributions to an HSA through a cafeteria plan, so your client would need to have a cafeteria plan in order to make that happen. Also, the employer could make separate/additional employer contributions to employees' HSA, which would be excluded under Code Section 106 subject to the HSA non-discrimination requirements (or Section 125 nondiscrimination requirements if made under a cafeteria plan). Good luck!

Advanced notice on the group health plan world is only required if the plan has a Summary Benefits and Coverage (SBC) and the change impacts the content of the SBC. Standalone HRAs are generally prohibited under ACA so I assume your HRA is integrated with the employer's major medical plan. If that is the case and the major medical plan's SBC includes HRA reimbursement information you likely will have to give 60 days advance notice of the change. If the change does not impact the content of the SBC, then to the extent the HRA is subject to ERISA (likely) then the SMM rules will apply in which case notice is required within 60 days after the adoption (not the effective date) of the change. Hope that helps.

Chaz, your instincts are right. Informal remarks by Elizabeth Purcell, IRS, Office of Chief Counsel at the May 2005 ECFC Annual conference confirmed that an individual who is covered by a general purpose health FSA (or HRA) will be ineligible to establish an HSA for the entire period of FSA coverage, regardless of whether such individual has exhausted his or her health FSA (or HRA) account balance. So the question then becomes does the spouse's termination from employment constitute a valid change in status event that would allow him to cancel FSA coverage midyear thereby making him/her eligible to establish and contribute to an HSA? I think the answer is no. The cafeteria plan rules for revoking FSA election are slightly more restrictive for FSA than for other benefit options and would likely not allow the employee to revoke the elections in this situation because such an election change would be inconsistent with the change in status event. Good luck.