Jump to content

FSA (Health) calendar year plan, prorate for new hires?


Recommended Posts

Yeah I think they could in theory, but why would they want to?  

The health FSA salary reduction contribution limit only needs to be prorated for a short plan year (i.e., not an employee entering mid-year into a health FSA full plan year).  The more the employee elects, the more the employer saves in FICA contributions.  And I don't see any heightened risk of experience losses with a mid-year entry if that's the motivation.  Plus, as long as they aren't coming from a related employer, the employee has a fresh $3.050 limit available to them even if they had a health FSA with the prior employer.

For the dependent care FSA, it's a simple $5k calendar year limit across-the-board that will be the employee's responsibility to stay within.  Again, the more the employee elects, the more the employer saves on the payroll tax side.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...