| ||
FLEXIBLE SPENDINGACCOUNTS FSA’s OVERVIEWAn employer-sponsored benefit program typically funded by the employee with pre-tax contributions that reimburses the employee for qualified medical expenses, and is subject to a use-it-or-lose-it rule requiring forfeiture of unused amounts at the end of the year. Comment: In brief: An employer book-keeping account for medical expenses funded by employee pre-tax contributions, with no carryover, accumulation, or portability. ELIGIBILITYAn employee who satisfies the eligibility requirements as established by the employer, subject to IRC §§ 125 and 105(h) non-discrimination rules (and who elects to contribute). ELIGIBILITY – HIGH DEDUCTIBLE PLAN REQUIREMENTS NONE. ACCOUNT REQUIREMENTS No requirement that an account be funded by the employer. Typically, reimbursed amounts are paid directly from an employer’s general assets. ACCOUNT STATUS/OWNERSHIP Typically, an employer bookkeeping account. A covered employee’s rights are typically those of an unsecured general creditor, and are limited by the terms of the FSA. ACCOUNT FUNDING/USE OF A CAFETERIA PLAN Amounts are typically contributed as pre-tax employee contributions as part of an IRC § 125 cafeteria plan. CONTRIBUTION LIMITS There are no statutorily prescribed limits to the amount of contributions that may be made to an FSA. An employer sponsoring the FSA, however, may place limits on contribution amounts by including plan language to that effect. Amounts may be effectively limited by the IRC § 125 cafeteria plan concentration and non-discrimination rules. | ||
| ||
