Options for health care benefits are becoming increasingly diverse. With rising premium costs and ACA regulations, however, finding the right health benefits that make sense for your employees and your budget can be complicated.
Rising in popularity amongst employers nationwide is the flexible spending account (FSA). If you’re unfamiliar with what an FSA is, here’s a quick background:
An FSA is a special account for pre-tax money that helps pay for certain out-of-pocket health care costs. The funds can pay for qualified medical, dental and vision expenses, including copayments and deductibles. Check out this list from the IRS of generally permitted expenses.
No taxes are paid on this money and employers may make contributions to employees’ FSA accounts.
If you do offer this benefit to your employees, one question you might run into is this:
Can I change my flexible spending account election mid-year?
Once you make an election for the plan year, you may change it mid-year only if you have a qualifying change of status event.
The IRS determines what counts as a qualifying event, and it typically includes the following:
(A plan may adopt all, some, or none of these).
- Marriage or divorce
- Death of a spouse or dependent
- Birth or adoption
- Change in residence
- Termination of employment affecting benefit eligibility
- Change in work status affecting benefit eligibility
- Unpaid leave of absence
The change in election must be consistent with the qualifying event that it triggers. For example, if you are adding a dependent, you cannot lower your contributions.
Dependent Care Account (DCA) plans slightly differ. If you leave your company, any money left unspent generally stays with your company. But if you quit or are terminated from your job and still have money left in your account, you may be able to spend down the account. To clarify, the participant has a limited time to submit claims after termination and the eligible expense must have been incurred before the term date. Check with your benefits administrator to work out these details.
Note on Rules for Unpaid Leave of Absence
Family Medical Leave Act (FMLA) leave allows an employee to either revoke or continue health coverage.
If an employee elects to continue health coverage, employee contributions can be prepaid, pay-as-you-go or paid after returning from leave. If an employee opts to discontinue coverage (or doesn’t pay premiums, depending on the arrangement), the employee upon returning from leave has a right to be reinstated in the plan at the same terms as when leave began.
Interested in health reimbursement benefits for your employees? PrimePay can help! Click here to learn more or give us a call at 877.44MYPAY.
Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding specific application of the information to your own plan.