Flex spending Trust accounting

[Guest Beneguy]

if a TPA has co-mingled Flex Spending and DCAP trust funds with operating and/ payroll funds...what is actual violation and what would cites be....Need help.

[Guest JerseyGirl]

I’m not sure I fully understand the question – the TPA is co-mingling the contributions made by a single employee to both Medical FSA and DCAP; co-mingling the payroll funds and FSA funds into one big pot; mixing funds from several clients? If the funds are in fact staying with the employer/plan sponsor, they should by kept as part of the general funds of that employer, stay in the operating account and only on paper are they separated out, strictly for tracking purposes.

Please clarify.

[Guest Beneguy]

I am being told by an associate that a TPA is tapping FSA and DCAP trust fund monies from a master trust fund account (used for multiple clients) for operating and payroll use. They wanted to know if I knew what the actual violation would be and what cites. Does that clarify?

[Ron Snyder]

That would likely constitute a violation of state banking laws. Generally, statutory permission is granted for commingling of funds to banks, trust companies, insurance companies, title companies, attorneys trust accounts, and similar accounts. A licenseed and bonded TPA firm may establish a claims payment account in the 15 or so states that license TPA firms.

[Guest Beneguy]

Thanks....Anyone else with thoughts on this matter....also, can someone tell me which are the 15 states or so that license TPA's or where to look it up...Any suggestions on what to tell this employer who is looking for help in this matter....thanks...