Chaz Posted December 9, 2016 Posted December 9, 2016 An employer has a large amount of heath FSA forfeitures on its books. Can it use these forfeitures to pay for TPA expenses for the health FSA that were incurred in years prior to the year in which the forfeiture relates. For instance, can it use 2016 forfeitures to pay (in effect, reimbursing itself) for administrative expenses incurred in, for example 2010?
Gary Kushner Posted January 6, 2017 Posted January 6, 2017 Yes, since an FSA forfeiture is technically the employer's money anyway. An employer can use the funds to offset administrative expenses or else return the funds on an equivalent basis (regardless of how much any individual forfeited) to participants.
My 2 cents Posted January 6, 2017 Posted January 6, 2017 Is it permissible for the unused funds to be returned to the participants (as opposed to permanently forfeited)? Always check with your actuary first!
Gary Kushner Posted January 6, 2017 Posted January 6, 2017 Not legally under Section 125 and the regs, other than equally to all participants.
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