By Steve Patterson
Some of the things we do for clients at Savers Admin aren’t immediately apparent. One of those is to reduce the risk of non-compliance.
Suppose you have a Flexible Spending Account plan, in which employees can shift before-tax compensation into an account for eligible medical or child-care expenses. Employees typically use a debit card to pay eligible expenses directly from the account.
We’ve all seen the list of expenses that may or may not qualify for payment from those accounts. Reconstructive surgery qualifies, but a facelift doesn’t. Medicine that your doctor prescribes qualifies, but over-the-counter medications don’t. It’s easy to make a mistake.
Ensuring that employees only use their FSA funds for eligible expenses helps the employer stay in compliance with FSA guidelines. Failing to do so can be risky if you or employee are ever audited.
The IRS could claim that not only the employee who misspent FSA funds, but also the entire plan, is out of compliance. The risk is more severe if they find the misspending is widespread. They could declare all your tax-exempt deductions taxable and bill you for taxes, penalties and interest.
It costs a little more when we adjudicate FSA spending – instead of simply approving everything that’s submitted, as some administrators do. But at Savers Admin, we think this is a good investment in our clients’ protection.
That’s one of the inconspicuous things we do, such as reviewing your plan documents and making sure all the appropriate amendments are up to date, to head off potential problems.
We want your payroll and benefits to be not only easy, but safe and compliant, as well.