Effective as of January 1, 2020, California enacted a law that requires employers offering flexible spending accounts (FSAs) to notify participants of any deadline to withdraw funds before the end of the plan year [should their participation in the FSA terminate early]. This law includes health FSAs, dependent care, or adoption assistance FSAs, and the requirement applies to any employer with employees in California.
The law does not state what specific information must be provided, when the required notices are to be provided or offer example language to provide. However, the law does state that the notification must be provided in two different forms, one of which can be electronic, which suggests that one form of notice must be in writing. Acceptable forms of notice could include (but are not limited to):
- Electronic mail communication
- Telephone communication
- Text message notification
- Postal mail notification
- In-person notification
Including the deadline in your summary plan description (SPD), could count as a notice. Otherwise, placing the information in an enrollment guide, balance statements, a newsletter, or in a COBRA notice would be additional ways to provide the required notice. Groups are advised to work with their benefits counsel to determine if compliance is required
More information on this new law can be found on the California Legislative Information site.
If you have additional questions about these changes or impacts, please contact a Further representative.