Time & Attendance
By Jerry Geisel
May. 1, 2012
An employer benefits lobbying group is asking the Treasury Department for transitional regulatory relief to ensure that participants in flexible spending accounts with non-calendar years can make the maximum legal contributions to their FSAs during the first year a health care reform law mandated FSA cutback goes into effect.
Under that provision in the Patient Protection and Affordable Care Act, which goes into effect on Jan. 1, 2013, the maximum annual contribution employees can make to their FSAs is $2,500. Under current law, there is no annual limit, though employers typically limit annual contributions to between $4,000 and $5,000.
Without regulatory relief, the new limitation would have an “effect of causing health plan FSAs that operate on a non-calendar-year basis to have to comply with the limitation earlier than the statutory effective date,” notes the Washington-based American Benefits Council.
In a letter sent last week to the Treasury Department, ABC cites the example of an employee in an FSA with a fiscal year that begins on July 1, 2012. The employee elects to contribute $3,600 during that plan year, making contributions of $300 a month from July 1, 2012, through June 30, 2013. FSAs typically are designed so employees make level contributions during the plan year.
If the employee elects to contribute $2,500 for the next plan year starting July 1, 2013, the employee would violate the $2,500 annual limitation for 2013, ABC notes.
That is because the employee would have contributed $300 a month for the first six months of 2013 and $208.33 for the last six months of 2013. That total contribution of $3,050 would violate the $2,500 statutory limit for 2013.
To prevent that from happening, ABC is asking Treasury to provide transition relief to make clear that FSAs with non-calendar years be exempt from the $2,500 cap on FSA contributions for plan years that begin prior to Jan. 1, 2013.
Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.
BenefitsWhat is Earned Wage Access (EWA)? A Few Considerations
Summary Earned wage access (EWA) programs are an increasingly popular way for employees to access their...
benefits, earned wage access products, payroll, time and attendance
BenefitsEEOC says that employers legally can offer incentives to employees to get vaccinated in almost all instances
If you’re an employer looking to get as many of your employees vaccinated as possible, you can rest eas...
ADA, CDC, COVID-19, EEOC, GINA, pandemic, vaccinated
BenefitsFixing some common misconceptions about HIPAA
Ever since the CDC amended its COVID-19 guidance to say that the fully vaccinated no longer need to wea...
COVID-19, health care, HIPAA, human resources, wellness