OAR 101-020-0065
Health Flexible Spending Arrangement
(1)
An eligible employee may enroll in a pretax Health Care Flexible Spending Account (Health Care FSA). An Health Care FSA is regulated by various federal government regulations. Health Care FSAs can be defined in part by the following categories.(a) It is a self-insured medical reimbursement plan subject to certain Internal Revenue Code requirements.
(b) It is a flexible spending account subject to additional requirements in the IRS regulations.
(c) It is a group health plan subject to COBRA, HIPAA, health care reform and other federal mandates that affect group health plans.
(2) Employees enrolled in a Health Care FSA contribute a pre-tax amount from each month’s salary during the plan year. Employees receive reimbursement from the account for qualified incurred health expenses during the plan year by submitting claims.
(3) FSA plans are annual plans, eligible employees must enroll for each plan year in order to participate. FSA plan enrollments do not roll over from one plan year to the next. All plan year FSA enrollments terminate December 31.The period of coverage is the 12 months during PEBB’s plan year.
(4) An employee’s failure to take an enrollment action is not considered an employee enrollment error. An enrollment action means that the employee during the allowable enrollment times must take an action to enroll, add to, save an active enrollment, or change benefit plan enrollment elections.
(5) The eligible employee is responsible for identifying enrollment errors and maintaining a valid and accurate Health Care flexible spending enrollment. The employee has 30 days from date of their first paycheck with their Health Care FSA enrollment to request a correction. The exception is open enrollment see OAR 101-020-0037 (Correcting Enrollment Errors and Open Enrollment Errors)(c).
(6) PEBB must review enrollment errors reported by the employee. Corrections if allowable must be consistent with the IRS regulations that govern flexible spending accounts.
(7) The annual employee contribution to the FSA account cannot exceed the allowable federal annual maximum.
(a) The employee’s monthly contribution is the employee’s elected annual contribution amount pro-rated per each month of the plan year.
(b) PEBB requires a minimum monthly contribution amount.
(c) An employee may make only one FSA contribution each month of the plan year.
(d) An employee may not change their monthly contribution unless they experience a qualified mid-year plan change event that allows the change.
(e) Some OUS employees may have fewer months (9 or 10) of contribution during the plan year. Employees that receive less than 12 months of paychecks during the plan year must indicate during enrollment the months in which they will not receive a paycheck. For employees who receive less than 12 paychecks in a plan year, the electronic system and the paper enrollment form provide check boxes to indicate the months in which no contribution will be made.
(8) FSA accounts have uniform coverage. Uniform coverage means that an employee’s maximum contribution amount for the plan year is available at all times while the account is active. The amount available is reduced for prior reimbursements made in the current plan year. Uniform coverage is provided throughout the period of coverage.
(9) Expenses must be incurred by the employee, spouse, the employee’s children who have not attained age 27 as of the end of the employee’s taxable year, or who are the employee’s tax dependents for health coverage purposes.
(10) A grace period for qualified claim and reimbursement extends through March 15 of each new plan year. During the grace period, FSA participants may incur claims against any remaining previous plan year FSA funds up to March 15 in the new plan year. The qualified claim submission deadline for previous plan year account fund reimbursements is March 31 of the new plan year.
(11) FSAs are “use it or lose it” accounts. Any previous plan year funds remaining in the account beyond March 31 of the new plan year forfeit to PEBB plan administration.
(12) Refunds of account funds without a timely claim and reimbursement submission process is not permitted. Fund transfers between the account types is not permitted.
(13) Employees taking an approved protected leave, for example, FMLA/OFLA, CBIW, or Active Military Duty Leave are entitled to continuation of the their Health Care FSA while on the leave.
(a) If the leave is a substituted paid leave, then the employee’s contribution for continuation must be paid by payroll deduction.
(b) An agency may offer one or more of the following options to an employee who continues the FSA account coverage while on a protected unpaid leave. Before commencing the leave, or shortly thereafter, the employee and the agency must agree to one of the following options for employee contribution.
(A) Prepay. The employee is given the opportunity to prepay their premium share due during the leave period before the leave begins. The prepay option cannot be the sole option offered to employees on approved protected leave.
(B) Pay as you go. The employee pays the cost of coverage in installments during the leave. Contributions are paid with after-tax dollars or with pre-tax dollars to the extent that the employee receives compensation (e.g., unused sick or vacation days) during the leave.
(C) Catch-up options. The employer and employee agree in advance that the employer will advance payment of the employee’s share of the contribution during the leave and that the employee will repay the advanced amounts when the employee returns to work.
(D) Revoke Coverage. Employees may revoke the FSA account enrollment during the leave.
(14) An employer is not required to continue the benefits of an employee who fails to make required payments while on a protected leave provided notice procedures are followed. Refer to OAR 101-20-0002(7)(d) for employee non-payment notices and benefit termination. If the employer chooses to continue the health coverage of an employee who fails to pay his or her share of the premium or contribution payments, the employer is permitted to recoup the employee’s premium.
(15) Employees who terminate FSA participation during the plan year can receive reimbursement for qualified claim expenses incurred while the Health Care FSA coverage was actively in force. No reimbursement is allowed for expenses incurred after the account terminates. Active participation ends the last day of the month that a contribution is received for that month.
(16) OUS and some academic OSPS employees that enroll based on their 9- or 10-month pay contributions are considered actively participating during the months of no contribution. For example, during months of June and July when they are not actively at work.
(17) Final contribution at termination of employment or a leave without pay terminating the FSA:
(a) OSPS, the employee will not have a contribution taken from their final paycheck.
“Example: Ann’s last day of work is September 16. Her final check will not have a contribution taken. Ann’s participation ends September 30.”
(b) An OUS employee who meets the 80-hour work rule will have a contribution taken from their final paycheck, in accordance with OAR 101-020-0002 (Plan Effective Dates, Employee Eligibility Continuation, and Plan Termination Dates).
“Example 1: Ann’s last day of work is June 6. She has less than 80 hours of work for the month. Ann’s final check will not have a contribution taken. Ann’s participation ends May 31.”
“Example 2: Ann’s last day of work is June 20. She has more than 80 hours of work for the month. Ann’s final check will have a contribution taken. Ann’s participation ends June 30.”
(18) An eligible employee terminating employment or going on an approved unprotected leave of absence, may continue to participate in the Health Care FSA up to the end of the current plan year through COBRA. There must be a positive FSA account balance and all contributions are paid post tax to the COBRA administrator.
(19) When called to active duty for a period of at least 180 days or for an indefinite period, an employee can request a qualified reservist distribution from a Health Care FSA. The eligible employee must be a member of the Army National Guard of the United States, the Army Reserve, Navy Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service.
(a) The following conditions must be met by the eligible employee in order to elect the qualified reservist distribution:
(A) Contributions to the Health Care FSA account for the plan year as of the date of the request for a distribution exceed the reimbursements received from the Health Care FSA Account for the plan year as of that date.
(B) The agency receives a copy of the order or call to active duty along with the distribution request form. An order or call to active duty of less than 180 days duration must be supplemented by subsequent calls or orders to reach a total of 180 or more days.
(C) During the period beginning with the date of the order or call to active duty and ending on the last eligible day of the plan year during which the order or call occurred, the employee submits a qualified reservist distribution election form to the agency.
“Example: An eligible employee is called to active duty on September 13, of the current plan year and wants a Health Care FSA qualified reservist distribution. The employee must request the qualified reservist distribution between September 13, and March of the following plan year.”
(b) The distribution amount paid to the eligible employee is equal to the contributions to the Health Care FSA Account for the plan year as of the date of the distribution request, minus any reimbursements received by the employee for the plan year as of that date. A qualified reservist distribution is included in an eligible employee’s gross income and reported as wages for the year it is paid.
“Example: An eligible employee elects Health Care FSA benefits of $1,000 for the current plan year, and during the first six months of the plan year, makes Health Care FSA contributions of $500 and receives Health FSA reimbursements of $200 for qualified medical care expenses. The employee is called to active duty for an indefinite period and on June 30 requests a reservist distribution from the agency. The employee will receive a distribution of $300, and the agency must add that amount to the employee’s taxable wages for the current tax year.”
(c) The Health Care FSA Account is closed as of the date of the request for a reservist distribution. An employee forfeits the right to receive reimbursements for medical care expenses incurred during the period that begins on the date of the distribution request and ending on the last day of the Plan Year.
(20) An employee who separates from the employer and returns to work in a benefit eligible position within 12 months is not reinstated in the Health Care FSA. They may enroll within 30 days of their new benefit eligible date.
Source:
Rule 101-020-0065 — Health Flexible Spending Arrangement, https://secure.sos.state.or.us/oard/view.action?ruleNumber=101-020-0065.