FSA Questions and Help
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1 Post
Hey Everyone ~
I am glad to be back on this list serve, I used to be here under my old employer and missed this valuable resource!!!!
Anyway, I have a few quick questions and would like your input and knowledge.
First, what is the waiting period before a new person can enroll in your flexible spending accoutns, both the HC and the DC?
Second, do you have different waiting periods?
Third, have you ever heard of a 1 year waiting period? Can you have a one year waiting period? What is the impact of such a waiting period on creating a specail open enrollment?
Forth, how many years have you been offering the plan? What is the percentage of the losing money, breaking even, or employees losing money?
Fifth and last,
A few years back I believe it was 3 or 4 years ago there was a private letter ruling from the IRS that stated that you could make changes to your Dependent Care Account if you had a change in child care. I.E. a change in providers, rates, etc. However, I cannot find this private letter ruling and I cannot find the back up. At the time that this change came around, I worked with an organization that used ADP Benefit Services, we decided to implement that change at the beginning of the following plan year and allowed one change a month, b/c we did not want people coming in every other pay day. If you know which revenue ruling could you please let me know.
I working on a proposal to change our plan from a one year waiting period to make if effective on the same date as the health insurance becoming effective. So, I am gathering data for my proposal.
I am glad to be back on this list serve, I used to be here under my old employer and missed this valuable resource!!!!
Anyway, I have a few quick questions and would like your input and knowledge.
First, what is the waiting period before a new person can enroll in your flexible spending accoutns, both the HC and the DC?
Second, do you have different waiting periods?
Third, have you ever heard of a 1 year waiting period? Can you have a one year waiting period? What is the impact of such a waiting period on creating a specail open enrollment?
Forth, how many years have you been offering the plan? What is the percentage of the losing money, breaking even, or employees losing money?
Fifth and last,
A few years back I believe it was 3 or 4 years ago there was a private letter ruling from the IRS that stated that you could make changes to your Dependent Care Account if you had a change in child care. I.E. a change in providers, rates, etc. However, I cannot find this private letter ruling and I cannot find the back up. At the time that this change came around, I worked with an organization that used ADP Benefit Services, we decided to implement that change at the beginning of the following plan year and allowed one change a month, b/c we did not want people coming in every other pay day. If you know which revenue ruling could you please let me know.I working on a proposal to change our plan from a one year waiting period to make if effective on the same date as the health insurance becoming effective. So, I am gathering data for my proposal.
Comments
>
>First, what is the waiting period before a new
>person can enroll in your flexible spending
>accoutns, both the HC and the DC?
Our effective date is the first of the month FOLLOWING 30 days of employment for our Flex HC/DC and Health, Life, Disability, etc.
>
>Second, do you have different waiting periods?
No
>
>Third, have you ever heard of a 1 year waiting
>period?
Not for these type of benefits although our 401K Plan you have to work for 1 year before joining the plan.
> Can you have a one year waiting period? Don't know, probably.
> What is the impact of such a waiting period on
>creating a specail open enrollment? Don't know.
>
>Forth, how many years have you been offering the
>plan? What is the percentage of the losing
>money, breaking even, or employees losing money?
This is the third year. Most people use their money but there are those who don't. We return the leftover money, after zeroing out the negative balances left by terminating ees, to EEs equally based on enrollment as of Dec. 31st and continuing employment. So far the first year we returned about $22, last year we returned about $40.
>
>Fifth and last,
>it was 3 or 4 years ago there was a private
>letter ruling from the IRS that stated that you
>could make changes to your Dependent Care
>Account if you had a change in child care. I.E.
>a change in providers, rates, etc. However, I
>cannot find this private letter ruling and I
>cannot find the back up. At the time that this
>change came around, I worked with an
>organization that used ADP Benefit Services, we
>decided to implement that change at the
>beginning of the following plan year and allowed
>one change a month, b/c we did not want people
>coming in every other pay day. If you know
>which revenue ruling could you please let me
>know.
>
Don't know about that.
>I working on a proposal to change our plan from
>a one year waiting period to make if effective
>on the same date as the health insurance
>becoming effective. So, I am gathering data for
>my proposal.
I would change it and make the eligibility and effective dates the same just for the sake of continuity.
I think that your waiting period can be whatever you define it to be in your plan document. We didn't put the dependent care at one year because it really only benefits the employer if employees participate since there is no risk of paying out funds before they are collected, and it reduces the employer FICA burden.
We've offered the plan for 3 years (we've only been in operation for just over 4). We've never had anyone lose money - I make sure that employees with balances in 4th quarter receive regular updates as to what they can yet claim, and offer to brainstorm with anyone who may be concerned about not incurring enough in claims to collect back all of their flex withholdings. Thus far (knock on wood) the employer has not lost any money in the health flex plan either.
I do recall hearing about the IRS ruling that you reference, but I don't have a specific reference for it right now. I'll take a quick look and if I find anything, I'll come back and post.