A flexible spending account (FSA) is an arrangement that allows employees to use pre-tax dollars to pay for many out-of-pocket IRS-eligible expenses.
California recently enacted AB 1554, which requires an employer to notify employees of any deadline to withdraw funds from a flexible spending account (FSA) before the end of the plan year.
The law applies to health care FSAs, dependent care FSAs and adoption assistance FSAs.
Employees must be notified by two different forms, only one of which can be electronic. Notice methods include e-mail, telephone, text message, postal mail or in-person notification.
Below you will find two notification templates to provide to your FSA participants.
The first link can be printed and provided to your FSA members in the following manner:
• Hand delivered
• Inserted with paycheck
The second link is for email purposes and can be copied and pasted as indicated on the attachment. This information would then be emailed to your FSA members.
You can also satisfy the notification requirement by providing the runout rules in an annual enrollment guide, employee newsletter or within a description of the runout rules on an employee benefit website.
Source: ASi Administrative Solutions