Q.- Do we have to reimburse an employee for the full amount of their annualHealth FSA election if they have only made one payroll contribution so far?
A.- Yes. Under IRS Health FSA rules, the full annual election amount must beavailable to the employee at the beginning of the plan year, even if theemployee has only contributed a small portion of that amount through payrolldeductions at the time the expense is incurred. As long as the expense iseligible and incurred during the plan year while the employee is participatingin the Health FSA, the plan must reimburse up to the full annual election. Thisis known as the uniform coverage rule and it applies regardless of theemployee’s contribution schedule.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
