We have received several questions from employers, brokers and consultants in reference to COVID-19 and the impact of actions employers are taking in regards to their workforce during this challenging time. This communication addresses plan administration guidelines specifically for Flexible Spending Accounts, Dependent Care, and Health Savings Accounts. As your administrative partner, we are hear for you and your clients to help navigate through this.

 

General Guidelines for FSAs, Dependent Care, and HSAs

  • Employees who are laid off should be offered COBRA or state continuation (if applicable for your company) for this benefit which can be subsidized by the company.

 

  • If you are reducing hours or furloughing employees, under normal circumstances, employees’ expenses would no longer be eligible. If you want to keep employee benefits in place (with expenses incurred to be eligible) during this period, draft a written policy and communicate it to employees. Payroll deductions should be caught up once they return to work. You can give employees the choice to drop the benefit, but you would want their written choices on file.

 

  • If your laid-off employees return to work within thirty days, their current election will resume and their deductions will need to be caught up. If they return to work after thirty days, they can make a new election (no less than their previously reimbursed amount) and new deductions would begin.  Unless they elected COBRA, their expenses would not be eligible during this time.

 

  • An employer could keep benefits in place for employees on furlough, but this should be a written policy. Deductions should be caught up when back to normal hours. Employers can change an employee status to “Leave of Absence” through their online portal – and specify whether expenses are eligible while they are on LOA (furlough) or not.

 

  • Employees whose hours have not been reduced, such as those working from home, do not have a Qualified Event to change their FSA election.  However, employees who are furloughed or have had hours reduced have experienced a Qualified Event and may reduce or drop the FSA.

 

  • For Dependent Care, to be eligible to participate, parent(s) must be both actively working. They lose eligibility for the benefit while they are out of work, but may restart the benefit when they return. In most cases employees can reduce or terminate their dependent care contributions in situations which they no longer have day care expenses or the amount of care needed has decreased.

 

  • HSA contributions can generally be changed at any time, but if payroll deductions have stopped, the employer should let Flyte know as soon as possible.

 

Our HR Pros are ready to help

Need assistance or have any questions about this communication? Our team of HR Professionals are ready to help you. Give us a call today at 952.746.0000 or email HRSupport@FlyteHCM.com