Annual Enrollment

[Guest Lesley Sifers]

A client has a cafeteria plan with premium conversion, Medical FSA and DCAP accounts. The company manages convenience stores and has employees in upwards of 50 locations across several states. There are 2-4 ees at each location and they all work different shifts. When plan was installed last year, there were all employee "seminar" type meetings to explain the program. We finally got all the enrollment forms and participation waivers (when applicable.) New employees coming in have been enrolled and completed forms, etc. Now it is open enrollment. I know we will need new elections for anyone who wants to use the FSAs next year. Is there any requirement that we get an annual waiver from people who do NOT want to use the FSAs? We have always had our clients go through the entire process each year but, in this case, with the logistics involved, it could take forever to get all the forms again. There are only about 10 people who actually used an FSA this plan year. The Plan Administrator would like to just send out a notice that anyone who wants to use an FSA next year needs to complete the proper forms before 12/31. Thanks for any input.

[Guest R Blair]

Sorry. All eligible employees must accept or decline coverage every new plan year.

Truly, it is in the employer's best interest to do this. The employer can be creative when trying to get these forms in, even the store manager can be made responsible for getting them back while handing out paychecks.

1. It ensures that benefits have been made available to ALL eligible employees. This upholds ERISA regs and also guards against discrimination causes in this area.

2. It is a reminder to employees of additional benefits they are receiving from the company. Benefits are important and ees want to get all they can.

3. It is an opportunity to enroll more participants and save the company more money on PR taxes. The higher the participation rate, the more money the company keeps.

A store manager could get the forms back from the employees while handing out paychecks.

[QDROphile]

I would love to know the authority that requires elections to be affirmatively renewed each year. While it may be the better practice to insist on new elections, I am not aware that evergreen elections are not permitted.

[Lisa Hand]

Evergreen elections are permitted, however, not recommended for FSAs. This function of the Plan does have to be stated in the Plan documents and clearly educated to all eligible employees, otherwise the Plan is not evergreen. Even with evergreen elections, it is still in the best interest of the Plan (employer) to clearly educate employees for each Plan Year. Low FSA participation is normally a sign of inadequate education which can be corrected over time.