New California Law Requiring FSA Notices

California Rules Employer Mandate Delayed

High Level Summary

New legislation in California has passed under Section 2810.7. It requires employers in California to notify employees who participate in a Flexible Spending Account (FSA) of any deadline to withdraw funds, where the deadline is prior to the end of the plan year. These California rules generally mean:

  • Terminated employees or employees who lose their FSA eligibility during the plan year must receive notification of the claims submission requirements and deadlines
  • Communications must be in two different forms

How do you meet the requirement?

Employers must notify affected employees of the deadline to submit claims by two different forms. One which can be electronic.

The acceptable forms through which to notify employees include but are not limited to:

  • Email
  • Telephone
  • Text
  • Postal mail
  • In-person

What best practices you can implement?

This legislation appears to target terminated employees or those losing coverage early. However, it is a good practice to notify all FSA participants of key deadlines. Here are a few of the tools and options available to you and your employees.

  1. Plan Highlights and Plan Documents. Your Plan Highlights are customized with the specific deadlines and cut-offs for claims submission. This includes what happens when an employee terms. These are automatically available through BRiWeb but can also be printed and handed to employees.
  2. Year-end balance reminders. Benefit Resource will automatically send a balance reminder email to participants who have a remaining FSA balance within 30-days of the end of the plan year.
  3. Balance alerts. Participants can sign-up to receive monthly balance and transaction alerts by email and text message.
  4. Enrollment presentations and materials. Make sure your open enrollment materials clearly outline key plan dates and eligibility information.
  5. Create an employee termination packet. Upon termination or loss of FSA coverage, provide a termination packet that can be handed to employees. This may consist of a copy of the Plan Highlights and a summary of their account. Download an account summary template that can be used as a guide.

This is not an exhaustive list and represents ideas for employers to use when communicating claim submission requirements. Employers may adapt resources and communication methods to meet the needs of their employee base. Just don’t forget. You must provide two different forms of communication under the new California rules.