Employee Benefits Compliance

California Employers Reminded to Provide Notice of FSA Use-it-or-lose-it Rule Deadline Beginning in 2020

California AB 1554, effective January 1, 2020, mandates California employers to provide notice in two forms of the deadline for the Flexible Spending Account (FSA), Dependent Care Flexible Spending Account (DCAP) and Adoption Assistance Flexible Spending Account use-it-or-lose-it rule deadline applicable to their FSA plan. At least one method must be electronic. Other methods include:

– Telephone
– Text message
– Postal mail
– In-person

Action Plan

Employers sponsoring those component plans should provide such notice before the deadline to withdraw before the end of the plan year.  It is advisable to provide one notification near the deadline. Plan sponsors may use their benefits guide and enrollment presentations as a method of compliance. Be sure compliance is documented and the cafeteria plan documents are properly updated with this information, if not already stated. Deadlines for submission of FSA claims should already be stated in the cafeteria plan document. If distributing this document, document the method for distribution.

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