Can employer mandate contributions to a flexible spending account?

[MERC]

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

My husbands employer mandates that he contribute $250 every week to a Flexible Spending Account. We are fairly healthy and have never used that much money for healthcare expenses. The Human Resources department did not provide any information regarding the FSA such as what is and is not covered, limits for any items, etc. When we contacted the company that handles the claims for information all they provided was a list of over-the-counter medications that would be covered. We submitted all of our claims, but several were denied with the explanation being "exceeded amount". Bottom line is he contributed over $6000 and we had expenses of only $2300 which we submitted, but were only reimbursed for $1800. My questions are:
(1) Is it legal for an employer to mandate that employees contribute to a flexible spending account?
(2) Is it legal for an employer to specify a blanket amount to be contributed to a flexible spending account? It would seem unfair to mandate the same amount for a single person and a person with six children.
(3) Aren't employers obligated to provide some type of printed information regarding the flexible spending account? Before my husband started working for this company, I participated in my company's FSA and was provided a booklet covering every detail imaginable.
I'm beginning to suspect someone is getting kickbacks for something because if the employer can specify a certain amount to be withheld, knowing it won't all be spent, where does the rest of that money go? Someone has $4700 that my husband earned! Thank you for your assistance.What is the name of your state (only U.S. law)?

 

[ecmst12]

Is this a FSA or an HSA? They are quite different.

 

[Beth3]

Since the OP mentions FSA several times, let's assume for the moment it is indeed an FSA.

We submitted all of our claims, but several were denied with the explanation being "exceeded amount". Bottom line is he contributed over $6000 and we had expenses of only $2300 which we submitted, but were only reimbursed for $1800. Are you sure that all that money is for an FSA health care account??? If so, then it makes no sense why you had eligible expenses denied as exceeding the amount of the annual election. I might first suggest your husband speak with HR or payroll and get clarification on that payroll deduction. While it's not a good payroll practice, perhaps the employee's contribution towards group health premiums and contributions to the Flex Plan are showing up as a combined deduction.

If all the money is being deferred into a Flex Plan, that's totally bizarre. I've never come across anything regarding FSA reg's and guidelines that speak to employee contributions into a health or dependent care spending account as anything other than voluntary. MERC, I suggest you or your husband contact the federal Department of Labor to discuss this after getting clarification on the payroll deduction.

I'm beginning to suspect someone is getting kickbacks for something because if the employer can specify a certain amount to be withheld, knowing it won't all be spent, where does the rest of that money go? Someone has $4700 that my husband earned! Under the law, FSA contributions are made on a "use it or lose it" basis. Any funds remaining in the account at the end of the Plan Year revert to the employer.

 

[ecmst12]

I asked because even though the poster called it an FSA, it doesn't sound anything like any FSA I have ever seen.

 

[Beth3]

Me too - which makes me wonder if that's not a combined payroll deduction for FSA and group health premiums, particularly since the reimbursement limit was $1,800 - a reasonable FSA amount for the OP's husband's planned deferral. I really can't imagine that they're mandating deductions of $6,000 from all employees and then absconding with the difference - not unless the CEO and the CFO are looking forward to doing time in a federal penitentiary.

Even if it's an HSA or some other pre-tax deferral variation, contributions still aren't mandated.