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Common Questions & Answers Regarding:
FSAs Who is eligible to participate? Only employees are eligible to participate in the FSA. Therefore, two percent or more owners in an S Corporation, sole proprietors, partners in a partnership, LLCs, and LLPs are not eligible to participate in the plan. Your Manley Services representative will work with you to resolve any eligibility questions. Can employees make changes during the plan year? Changes to the dependent care account can be made if the participant experiences a qualified change in status (marriage, divorce, birth, death, adoption, a spouse changing employment, or a job shift change for the employee or their spouse that directly affects their child care). Changes to the unreimbursed health expense account are based on a more limited set of qualifying events, and can be made only if the plan you have adopted allows changes to this account. How soon must employees submit claims? Employees may submit requests for reimbursement at any time during the year, and have until 90 days after the plan year to make requests. What if employees want to change their deduction amount? With the healthcare FSA, the deduction amount may not be changed during the plan year unless your plan document allows for qualified changes. The deduction amount for dependent care may be changed during the plan year, but only if a qualified status change has occurred. To change their deduction, employees simply complete a change form and submit it to their human resources department. Can a participant be reimbursed before they have contributed the amount to the account? It depends on the type of account. With a dependent care account, the eligible reimbursement amount is available only after the funds have been payroll deducted and those funds have been received by Manley. For the unreimbursed health expense account, the reimbursement process will start after the plan year is established and we have received the first payroll reduction of the plan year. Participants have access to their total annual election at this time. What is the maximum allowable allocation for an FSA? It varies by the type of account. For a dependent care FSA, the maximum is $5,000 per calendar year, or $2,500 if married filing separately. With a healthcare spending account, the maximum annual election is up to you, the employer. With a premium only plan, no such maximum applies as the premium is the only pre-tax deduction. Have another question about FSAs? Feel free to contact us. Our company has a health FSA through Manley Services and we’d like to add an HRA. Which account reimburses health expenses first? It’s up to you. Simply let us know what works best for you and we can design your plans accordingly. Who is eligible to participate in an HRA? Except for owners and partners, all employees are eligible to participate in HRAs. According to IRS guidelines, anyone with two percent or more ownership in a schedule S corporation, LLC, LLP, PC, sole proprietorship, or partnership may not participate. Your Manley Services representative will work with you to resolve any eligibility questions. Can employees use pre-tax salary reductions to contribute to the HRA? No, the HRA itself can only be funded with employer contributions. If offered with an insurance plan under a cafeteria plan, the employee portion of the premium may be paid with pre-tax dollars under a cafeteria plan. What types of medical expenses can be reimbursed with the HRA? To a large extent, that’s up to you as the employer. You can allow reimbursement of a broad range of health-related expenses by adopting the IRS Section 213(d) definition of allowable expenses. Doing so would allow HRA reimbursement of the same expenses allowed under a healthcare FSA, including medical, dental, vision, prescription drug, and health insurance premium expenses. Alternatively, you can set up your HRA to allow reimbursement of only certain types of health-related expenses. Many employers limit HRA reimbursements to expenses that are covered under their health plan but subject to the deductible. You might then consider offering employees an FSA to self-fund other expenses not allowed under the HRA, such as dental and vision care. How much should I allocate for each employee? As the employer, you have the flexibility to set your own HRA allocation amount. In general, we recommend funding the HRA at 50 to 75 percent of your health plan’s annual deductible for each employee. That level gives employees a reasonable amount of first-dollar coverage while still providing for some cost sharing. Is the HRA allocation based on a calendar year or a rolling plan year? The HRA allocation is generally based on the plan year. However, if you purchase an HRA mid-year and want to adjust the HRA’s plan year to coincide with your medical plan’s calendar year deductible, we can do that. In that case, you would prorate the first (partial) year’s HRA allocation, and begin the full annual allocation on the following January 1. Can I define the HRA carry over amount? Yes, you may set rules on the HRA carry over provision, and may choose to impose an annual carry over maximum. You may also cap the total HRA account balance if you wish. Can employees cash out unused HRA amounts before retiring or changing jobs? No, the HRA can only be used for reimbursement of medical expenses. The plan may be designed, however, to permit a terminated employee to be reimbursed for medical expenses incurred after the termination date. Can employees use their HRA funds to pay COBRA premiums after termination? It’s up to you. Employees can access their remaining HRA funds as long as they remain on continuation coverage, but you can choose whether to allow continuation premium as an eligible expense under their HRA. Have another question about HRAs? Feel free to contact us. Where do employees send their premium payments? They send their premium payments directly to us. We then total premiums and forward this sum to the appropriate party. In most cases this will be the employer; however, in some cases we send the premium directly to the health insurer. Why do I need to notify you of a qualifying event? Can’t Manley take over that function as well? Because we do not have access to your employees’ records, we depend on you for this information. Once we are aware of your employees’ qualifying events, we can handle the COBRA process from that point forward. What is included in the reports I’ll receive? The monthly reports give you a snapshot of participating employees. You will be updated on which employees are currently enrolled, who has terminated, and what notifications we have sent. Who can employees call with questions about COBRA benefits? Customer service is an important part of our overall COBRA administration package. Participating employees may contact us directly with questions either by phone or e-mail. We will make every effort to answer their questions right away, or get back to them by the end of the next business day. What is the approximate cost for this service? Our fee structure, based on the number of eligible employees, has been well received by employers. A representative from Manley will be glad to talk with you directly and give you a quote. Call us today and let us show you our program. Have another question about COBRA Administration? Feel free to contact us. Questions about the Transportation Benefit Who is eligible for the Transportation Benefit? Only employees are eligible to participate in the Section 132 Transportation Benefit. Therefore, two percent or more owners in an S Corporation, sole proprietors, partners in a partnership, LLCs, and LLPs are not eligible to participate in the plan. Your Manley Services representative will work with you to resolve any eligibility questions. Is this different than our flexible spending account plan? Yes, this is a separate tax code. One significant difference is that funds left in the transportation plan at the end of the year may be rolled into the next year. Upon termination, however, funds remaining in the account will be forfeited back to the employer. Can employees drop the plan, and then re-enroll later? Employees may discontinue the plan at any time; however, they may not re-enroll until the next plan year unless they meet one of the following qualifying events: change in worksite; change in hours; change in residence; or other changes in a commute allowed by IRS Code. Can employees carry over unused funds from one month to the next? Only if the amount requested does not exceed the federal limits per month. In other words, they will not be reimbursed more than $190 for parking in any one month. How soon must employees submit claims? They may submit requests for reimbursement at any time during the year, and have until 90 days after the plan year to make requests. Otherwise funds will be rolled into the next plan year. What if employees want to change their deduction amount? While we allow employees to make changes at any time, you have the option of limiting the number of changes to simplify your administration. To make a change, the employee should complete a change form and submit it to your payroll department. Have another question about our Transportation Benefit? Feel free to contact us.
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