Not provided complete information on Dependent care flex account

[spiceca]

What is the name of your state (only U.S. law)?CA

I signed up for dependent care flex account and was not provided the information upfront that the monies would not be available until after they were accrued from my pay. I would not have signed up for this program if I had known this upfront. I feel this is akin to signing a contract w/o being provided the fine print until after the contract is executed.

What are my legal options?

 

[Antigone*]

What is the name of your state (only U.S. law)?CA

I signed up for dependent care flex account and was not provided the information upfront that the monies would not be available until after they were accrued from my pay. I would not have signed up for this program if I had known this upfront. I feel this is akin to signing a contract w/o being provided the fine print until after the contract is executed.

What are my legal options?

That is strange because you would need to use the full amount of the funds prior to the end of the year. Did you ask them specifically how that would be accomplished if they don't allow you to use the last penny until it is accrued?

 

[spiceca]

That is strange because you would need to use the full amount of the funds prior to the end of the year. Did you ask them specifically how that would be accomplished if they don't allow you to use the last penny until it is accrued?

They said that I have a 90 day grace period after the year to submit any last claims. I was also told that it is set up with way due to IRS regulations. I am not arguing how this works- what I am upset is that this information should have been clearly stated when I signed up but it was not. I dont know who would opt into such a program either.

 

[cbg]

Under Federal law, on a dependent care FSA you can only utilize what's already been deducted. To give an example, if you are putting in $100 a month (I know with most people it will be much more, but this is for easy arithmetic), and are paid on the last day of the month, on February 1 you can put in a claim for $100, but not more than that. You can put in a claim for another $100 on March 1. Or, if you prefer, you can wait till April 1 and put in a claim for $300. You just can't put in a claim for money that has not yet been deducted from your paycheck yet. Not on a dependent care FSA. You can on a medical FSA. And the reason you can't is that the IRS and/or Congress say so. That limit is statutory. Nothing you or your employer can do about it.

There's nothing you can do about it now. Under the same statutes, once the plan year has started you cannot make any changes unless you have a qualifying event that allows for it, and what is and is not a valid qualifying event is also set by statute. "I didn't understand that I would not be able to utilize money I hadn't contributed yet" is NOT a valid qualifying event under IRS regs.

 

[swalsh411]

You just can't put in a claim for money that has not yet been deducted from your paycheck yet.

That's not accurate. You can put in a claim for any amount at any time you want. It just won't be paid until it has been taken out of your check and available to you. So if you have spent $1000 but only had $500 come out of your check, go ahead and submit the full $1000. You will be paid $500 right away and the rest as it becomes available. There is no rule or law that says you have to wait until the funds are available before you submit a claim.

I wonder why the OP would want to be paid out for funds that had not yet been deducted? Perhapes they were hoping to prepay for months of day care, submit a claim for that much, get paid, and then quit?

 

[spiceca]

"I didn't understand that I would not be able to utilize money I hadn't contributed yet" is NOT a valid qualifying event under IRS regs.

Im not saying that I didnt understand it- if the information had been available then I would have understood it. My husband is in the same boat in which he specifically asked for information from his HR department and they were not forthcoming with this information. They never responded and he had to make his elections.

Im saying that I wasnt provided that information. I am saying that I was uninformed as to the regulations.

IMO- this is a breech of contract of sorts.

 

[Antigone*]

Under Federal law, on a dependent care FSA you can only utilize what's already been deducted. To give an example, if you are putting in $100 a month (I know with most people it will be much more, but this is for easy arithmetic), and are paid on the last day of the month, on February 1 you can put in a claim for $100, but not more than that. You can put in a claim for another $100 on March 1. Or, if you prefer, you can wait till April 1 and put in a claim for $300. You just can't put in a claim for money that has not yet been deducted from your paycheck yet. Not on a dependent care FSA. You can on a medical FSA. And the reason you can't is that the IRS and/or Congress say so. That limit is statutory. Nothing you or your employer can do about it.

There's nothing you can do about it now. Under the same statutes, once the plan year has started you cannot make any changes unless you have a qualifying event that allows for it, and what is and is not a valid qualifying event is also set by statute. "I didn't understand that I would not be able to utilize money I hadn't contributed yet" is NOT a valid qualifying event under IRS regs.

I didn't read this properly. I didn't realize it was dependent care FSA.

 

[spiceca]

I wonder why the OP would want to be paid out for funds that had not yet been deducted? Perhapes they were hoping to prepay for months of day care, submit a claim for that much, get paid, and then quit?

Wow- thanks for thinking I was trying to get around this.


I was under the impression that it worked in the same fashion as the health care spending account- which does have the monies upfront. Why would anyone who has to pay daycare do this- there is no advantage unless you can claim upfront. I can claim it on my taxes anyway if I didnt do this program.

 

[cbg]

Okay, you are free to consider it a breach of contract if it pleases you to do so.

However, it's not going to do you any good. BY LAW you are stuck with the decision. Your employer is NOT free to let you drop the FSA. And really? That information is readily available since it's universal to all dependent care FSA's everywhere in the US.

And why is it so urgent that you have access to it before you have it deducted anyway?

 

[swalsh411]

Im not saying that I didnt understand it- if the information had been available then I would have understood it. My husband is in the same boat in which he specifically asked for information from his HR department and they were not forthcoming with this information. They never responded and he had to make his elections.

Im saying that I wasnt provided that information. I am saying that I was uninformed as to the regulations.

The information on the rules of dependent care programs is out there all over the place. 30 seconds on google could have answer your questions. Are you not able to obtain information about topics of importance to your life on your own or do you need to be spoon fed everything?

The employer has no authority to override the rules laid out in the law. Zero. So you're stuck it it.

IMO- this is a breech of contract of sorts.

Not even close.

 

[swalsh411]

Wow- thanks for thinking I was trying to get around this.


I was under the impression that it worked in the same fashion as the health care spending account- which does have the monies upfront. Why would anyone who has to pay daycare do this- there is no advantage unless you can claim upfront. I can claim it on my taxes anyway if I didnt do this program.

What other reason woudl there be for you thinking you should have access to your funds before they have been deducted from your check?

Medical flex spending is a little different because a person may have an expensive procedure scheduled early in the plan year so it makes sense the entire year's amount would be available to them from the beginning. Daycare however is ongoing and predictable.

edit: The advantage is that it gets taken out of your check pre-tax and then reimbursed to you with no taxes withheld. That can be a huge savings depending on what marginal tax bracket you are in.

 

[spiceca]

That information is readily available since it's universal to all dependent care FSA's everywhere in the US.

And why is it so urgent that you have access to it before you have it deducted anyway?

My HR should have provided this information upfront. It seems as though not providing it was shady.

As a new parent I shouldnt have to go traipsing around the web looking for information on something that should just be provided with my enrollment package.

As far as finances- we were hoping to get ahead on our finances- after having a baby, being on maternity leave and having an austere Christmas this was a way to be able to catch up. Now we are paying basically 3 daycare payments (when you consider how much we are taking out) instead of two a month and who knows if we will be able to eat this month and cant claim anything yet.

Are you not able to obtain information about topics of importance to your life on your own or do you need to be spoon fed everything?

Thats just rude and unhelpful. No- I have a 4 month old and should be able to rely on my HR department being forthcoming with information on plan options.

 

[Antigone*]

My HR should have provided this information upfront. It seems as though not providing it was shady.

As a new parent I shouldnt have to go traipsing around the web looking for information on something that should just be provided with my enrollment package.

As far as finances- we were hoping to get ahead on our finances- after having a baby, being on maternity leave and having an austere Christmas this was a way to be able to catch up. Now we are paying basically 3 daycare payments (when you consider how much we are taking out) instead of two a month and who knows if we will be able to eat this month and cant claim anything yet.



Thats just rude and unhelpful. No- I have a 4 month old and should be able to rely on my HR department being forthcoming with information on plan options.

You SHOULD have also done your own research on this federally regulated program. This is on you more than anyone else since it is your money and your benefits.

 

[Zigner]

Are you not able to obtain information about topics of importance to your life on your own or do you need to be spoon fed everything?

The further responses by the OP would tend to show the latter is the case.

 

[spiceca]

I didnt come on here to get attacked.

thanks for nothing.

I'm assuming noone on here has ever had a newborn with complete lack of sleep, working full time and expects the HR department to do their job. I got back from maternity leave with only a few days to make my elections. And no- I dont have all the time in the world to look everything up- I do my best but its not easy.

Im done here.....feel free to continuing being jerks to a very stressed out mama. Shame on the lot of you.