PSA TPA FAQ

Please note: The following answers apply to PacificSource Administrators (PSA TPA) products. If your health FSA, dependent care account, or premium-only plan is administered by another TPA, please contact them. If you have a question not addressed here or in your Summary Plan Description (SPD), please call our PSA Customer Service at 800-422-7038.

Health FSAs

In these circumstances, you have a few options:

  1. If employees are receiving pay while not working, the Health FSA contributions can continue to be deducted. This will maintain the benefit and account availability for the member.
  2. The employer can make the Health FSA contributions on behalf of enrolled members while they are out, and collect those funds upon their return to work. This is the simplest option for you and your employees; it also maintains the benefit and account availability during the time the employee is not working.
  3. Employees can choose to make contributions to the Health FSA while on an unpaid leave or furlough (if they anticipate returning to work). These contributions will be paid with after-tax dollars. Employees would send the contribution payments to you, and then you would pass the contributions to PSA with your invoice payments.
  4. You can stop the contributions to the Health FSA while the employee is not working. This would stop the benefit during the period the contributions are not being made (called a blackout period), and no claims incurred during the blackout period will be eligible for reimbursement.

All election changes are prospective – effective the start of the pay period following the change event and receipt of the change form. Changes are not retroactive.

Note: If your plan pro-rates plan year election changes, new contributions upon resuming the account may be pro-rated based on the number of pay periods remaining in the plan year. Please refer to your Summary Plan Description (SPD) for specific details regarding your plan design.

Employees must experience an IRS recognized qualified event (such as a layoff, loss of eligibility/reduction of hours, or termination) in order to be eligible to reduce funding.

There are no adjustments to grace periods at this time. This is under EBIA editorial review.

There are no changes at this time. This is under EBIA editorial review.

Yes, PacificSource Administrators will be extending the grace period for submitting reimbursement requests from March 30th to April 30th. If a group does not want to offer the extended grace period, they will need to contact PacificSource Administrators.

Yes, on a prospective basis, depending on the type of product in which the employee is enrolled or enrolling, the IRS has issued new guidance on what is allowed.

FSAs and Dependent Care Assistance Programs – an employee can revoke an election, make a new election or decrease or increase an existing electing on a prospective basis.

Employer-Sponsored Health Insurance – on a prospective basis, an employee can 1) make a new election for coverage if they originally declined coverage, 2) they can revoke an existing election and make a new election to enroll in difference coverage if sponsored by the same employer, 3) they can revoke an existing election of coverage provided that the employee attests in writing that the employee is enrolled, or will enroll immediately in other coverage not sponsored by the employer.

Details of Notice 2020-29 and requirements can be found here: https://www.irs.gov/pub/irs-drop/n-20-29.pdf

Yes, if an employer adopts any of the above mid-year changes, they must provide a plan amendment.

Yes, the carryover limit for unused amounts remaining in a FSA increased from $500 to $550.

A plan may treat an expense for a premium for health insurance coverage as incurred on:

  • The first day of each moth of coverage on a pro rata basis,
  • The first day of the period of coverage, or
  • The date the premium is paid

Details of Notice 2020-33 and requirements can be found here: https://www.irs.gov/pub/irs-drop/n-20-33.pdf

Premium Only Plans (POP)

We are following current IRS rules. An employee must have a QE to stop their coverage—even if the insurance carrier allows employees to stop coverage, POP will not allow it without a QE (such as a layoff, loss of eligibility/reduction of hours, or termination).

Dependent Care Expense Accounts

School closures, reduced work hours (or business closures), lay-offs, and furloughs are all creating changes for employees’ needs for childcare. Qualifying events under the Dependent Care Expense account are usually circumstances that causes a change in the cost or need for childcare, such as school closure, childcare provider changes, daycare closures, change in costs, or change in work hours.

All election changes are prospective – effective the start of the pay period following the change event and receipt of the change form. Changes are not retroactive.

Note: If your plan pro-rates plan year election changes, new contributions upon resuming the account may be pro-rated based on the number of pay periods remaining in the plan year. Please refer to your Summary Plan Description (SPD) for specific details regarding your plan design.