2005-08-24 CC Packet - Laserfiche WebLink

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Atd~ COBRA: Applicable health FSAs have a maximum period of continuation coverage through the end of the plan year in which the qualifying event occurs. Accordingly, if an individual has maintained health FSA coverage pursuant to COBRA and remains covered on the last day of a plan year, the individual would be eligible to take advantage of an allowed grace period. No further contributions would be made by the COBRA qualified beneficiary for the grace period; which also means the individual would not pay anything for the continued access to their health FSA during the grace period. If a qualified beneficiary stops paying COBRA premiums for the health FSA, and health FSA coverage ends before the last day ofthe plan year, they would not be able to take advantage of the grace period. BRAs: If you are an employer that sponsors a health FSA and a Health Reimbursement Arrangement (HRA), your plan design should dictate which plan pays expenses first. If the health FSA adopts the grace period, the ordering language would need to be reviewed. HSAs: The IRS has recently ruled that if an employer adopts an FSA grace period, employers and participants may not contribute to an HSA until the first month following the end of the grace period, unless it is a limited scope FSA. Alternatively, plan sponsors can provide participants with the ability to opt out of the grace period, thereby avoiding an extension of "other coverage" following the close of the current plan year. Acclaim Benefits is prepared to administer FSA grace periods for plan years ending December 31, 2005, or later. Enclosed is an amendment request form. Once you have determined how you intend to proceed with respect to the FSA grace period, please select the appropriate option(s) and return the request form to Acclaim Benefits by September 1, 2005. If you decide to adopt the grace period, then upon receipt of your completed request form, Acclaim Benefits will forward a plan amendment for your signature and will also forward a summary of material modification for distribution to participants. If you should have any questions regarding this administrative change, please contact Rhonda Routh at 763-278-4782 or Michelle L. Conger at 763-278-4278. Thank you. Flexible Spending Account Department . 3405 Annapolis Lane North . Plymouth, MN 55447 . www.acclaimbenefits.com . fax 763-278-4004 /7