There are many services a 3rd party administrator of Flexible Spending and Commuter Spending Accounts can provide for a plan. These services can include COBRA administration and direct billing. Typically, they will provide a Section 125 wrap plan for the FSA, which usually uses a Plan number of 501, as well as an SPD for the FSA to guarantee that participants have the required documents.
As previously stated, plan documents issued by FSA administrators typically only apply to the Section 125 pre-tax premiums and the Health Care FSA. If the plans do not know the names of health and welfare benefits, they will sometimes try to tie them in via reference. If the employer were to receive this type of plan and subsequently “adopt” it, then the employer would have to sponsor the flex plan that was created by this. The plan number is generally a 501 number that is assigned by the 3rd party administrator. The majority of employers do nothing with these plans when they receive them. If no action is taken for the plan, your new document may have a replacement for the Section 125 and cafeteria plan provisions.
Even if the Section 125 is replaced, the FSAs will still require an SPD. Some options that the employer can choose from include, adding the FSA to your new document and using the SPD provided by the 3rd party administrator as a “benefit summary”, alternatively they can issue the SPD separately as a stand-alone SPD. Depending on what action the employer has taken, several different courses of action are available.
