elections must be spread equally over plan year?

[Jacmo]

Must FSA elections be spread equally over the plan year? Group is faced with almost impossible task of getting national enrollment done by the first pay period in the new plan year. They want to start with the second pay period and divide FSA elections equally over the remaining pay periods.

Anybody?

[MARYMM]

Must FSA elections be spread equally over the plan year? Group is faced with almost impossible task of getting national enrollment done by the first pay period in the new plan year. They want to start with the second pay period and divide FSA elections equally over the remaining pay periods.

Anybody?

Sure, why not ? If it is a Medical FSA, you're still on the hook for the same amount of reimbursement no matter when you start payroll deductions. For Dependent Care FSA, I used to front load deductions frequently for ee's who wanted the funds available for summer day camp deposits.

I'd say as long as the Plan Doc does not specifically prohibit it, you can do it

[QDROphile]

I would be concerned that expenses incurred in the period prior to effective enrollment would not be eligible for reimbursement. Also, you would not know the amount of coverage until the salary reduction agreement is effective. The employer could provide coverage for the initial period at no cost to the employee, but it would be impossible to match the coverage with the amounts that are actually elected.

[LRDG]

Notify EEs to postpone any FSA services/expenses until they sign/date enrollment/election forms.

DC FSA expenses can't be postponed, so use your imagination, don't break the rules, and keep your EEs whole.

Another option is to allow EEs, particularly EEs familiar with FSAs and particularly those with planned expenses early in the plan year, to make their election, complete, sign and date their enrollment form, in advance of the 'extended' annual open enrollment meetings or the 'extended' annual open enrollment deadline.

During the 'extended' enrollment meeting or the date 'extended' annual open enrollment ends, EEs may need an opportunity to make election adjustments based on info communicated in 'extended' open enrollment meeting.

Because this is an administrator/ER problem, EEs should be accomodated as much as possible. Every effort shoud be made to help EEs avoid claim problems or denied claims resulting in possible forfeitures for EEs. This is based on a problem EEs have absolutely no control over and is not of their making, they should not be penalized with forced forfeiture of funds and/or denied claims.

It is perfectly acceptable to deduct annual elections over fewer payroll frequencies. For instance, FSAs funded over 20 payroll frequencies, versus the full 24 or 26 payroll frequencies within the plan year.

Doing so will complicate DC FSAs for DC participants, and particular attention will be required through out the plan year because the annual election is deducted over fewer payroll frequencies, which can affect FSA account balances. This can be a problem through out the plan year.

An altermative is to withhold missed FSA deductions on the first payroll frequency to cover those that were missed. For example, if 2 payroll frequency FSA deductions were missed, double the FSA deductions on the first payroll frequency following conclusion of the 'extended' annual open enrollment.

[Jacmo]

After doing a little research, it appears that QDROphile is right. Expenses incurred after the plan year starts but before the election form is signed (or before next payroll date) would not be reimbursable.

[LRDG]

"Must FSA elections be spread equally over the plan year?"

If the question is if payroll deducting FSA elections over 24 verus 26 pay periods would create a problem, no it's an administrative decision and would not create a compliance or an eligiility problem.

If the problem is that enrollment forms won't be signed and dated piror to the plan year effective date, than any claims that pre date the FSA enrollment form will not be eligible and yes that might be a problem for employees who were not advised during the late enrollment meeting that they should either not include in their FSA election any expenses they incurred prior to the date on the enrollment form because if the employees are not fairly warned, and they forfeite funds they will not be happy and if this is a 3rd party client, that IS not good but if it's just your employees, well that's not good either because EE don't like forfeiting their FSA funds when it could have been avoided but that's just my opinion employee probably love forfeiting a portion of their salary that funded their FSA so never mind.

It's not clear if the problem is one of keying in/uploading election data, or one of signing, dating and completing enrollment froms prior to plan effective date. The enrollment form date would determine eligibility of claims.

[Guest taxesquire]

...and next year, start your open enrollment sooner!!!