Flexible Spending Account

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Flexible Spending Accounts | Features & Services | Rules & Testing | Plan Risks | Pricing | Have A Rep Call Me | Download A FSA Proposal | Set-up Plan Online

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Rules and Discrimination Testing

Purpose of Discrimination Testing: To encourage the establishment of FSA plans for all employees rather than a select few.

Eligibility:
The wait for eligibility cannot be longer than 3 years & cannot discriminate in favor of highly compensated

Contribution & Benefit Test:
Key employees cannot receive more than 25% of the non-taxable benefits

Dependent Care (2 Tests):

1. Average Benefit Test: the average benefit for non-highly compensated equals 55% of the average benefit for highly compensated

2. 5% shareholders & owners cannot receive more than 25% of the total Dependent Care Benefit

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Rules:

Partners of a partnership and Owners in an S corporation cannot participate, nor can their spouse or children.
If you do not use your election by the end of the plan year the forfeited money is retained by the employer.
A claim can be paid for the whole annual election at any time in the plan year for the Flexible Spending Account.
Dependent Care Account claims can only be paid for the amount of money deposited in the account at that time.
Key Employees can only use 25% of the total benefits (collectively).
Premiums can be changed during the plan year when the renewal for the Health Insurance is at a different time than the open enrollment for the Flexible Spending Plan. (Only if the carrier remains the same)
You can only change elections in the Medical Spending Account and Dependent Care Account if you have a life status change:
* Birth or Adoption of a child
* Death of dependent or spouse
*Change from part time to full time employment of you or your spouse (or vise versa).
*Change in marital status

Filing of form 5500 and Schedule F are required for all FSA plans. They are due seven months after the end of the plan year.
There are some ineligible expenses such as teeth whitening and fitness related expenses. (Check with the www.irs.gov for a complete listing of ineligible as well as eligible expenses.)

Flexible Spending Accounts \| Features & Services \| Rules & Testing \| Plan Risks \| Pricing \| Have A Rep Call Me \| Download A FSA Proposal \| Set-up Plan Online Previous \| Next


*Rules and Discrimination Testing*

Purpose of Discrimination Testing:	To encourage the establishment of FSA plans for all employees rather than a select few.
Eligibility:	The wait for eligibility cannot be longer than 3 years & cannot discriminate in favor of highly compensated
Contribution & Benefit Test:	Key employees cannot receive more than 25% of the non-taxable benefits
Dependent Care (2 Tests):	1. Average Benefit Test: the average benefit for non-highly compensated equals 55% of the average benefit for highly compensated 2. 5% shareholders & owners cannot receive more than 25% of the total Dependent Care Benefit
Top

Rules:
Partners of a partnership and Owners in an S corporation cannot participate, nor can their spouse or children. If you do not use your election by the end of the plan year the forfeited money is retained by the employer. A claim can be paid for the whole annual election at any time in the plan year for the Flexible Spending Account. Dependent Care Account claims can only be paid for the amount of money deposited in the account at that time. Key Employees can only use 25% of the total benefits (collectively). Premiums can be changed during the plan year when the renewal for the Health Insurance is at a different time than the open enrollment for the Flexible Spending Plan. (Only if the carrier remains the same) You can only change elections in the Medical Spending Account and Dependent Care Account if you have a life status change: * Birth or Adoption of a child * Death of dependent or spouse Change from part time to full time employment of you or your spouse (or vise versa). Change in marital status Filing of form 5500 and Schedule F are required for all FSA plans. They are due seven months after the end of the plan year. There are some ineligible expenses such as teeth whitening and fitness related expenses. (Check with the www.irs.gov for a complete listing of ineligible as well as eligible expenses.)