This SOP governs the setup, administration, and ongoing management of Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) for participating employer groups under the Unity Care Member Plan Master Trust. HealthEquity is the designated FSA/HSA administrator. The Nuwell HR/Benefits Administrator is the primary employer-side contact for FSA/HSA setup and payroll instructions.
Applies to all participating employer groups offering FSA or HSA benefits. Covers account setup, employee enrollment, payroll deduction configuration, annual limit updates, mid-year changes, eligibility file feeds, and excess contribution correction procedures.
| Role | Responsibility |
|---|---|
| HealthEquity | HSA and FSA account administration; member portal; debit card issuance; eligibility file processing; compliance reporting. |
| HR / Benefits Administrator (Nuwell) | Owns FSA/HSA setup for Nuwell employer group; manages payroll deduction instructions; coordinates employee enrollment and mid-year changes. |
| Operations | Coordinates HealthEquity setup for new employer groups; monitors HealthEquity file feed accuracy; escalates eligibility discrepancies; ensures annual limit updates are implemented before January 1. |
| Employer HR (all groups) | Configures payroll deductions in payroll system; submits enrollment data; processes mid-year changes upon qualifying life events. |
Flexible Spending Accounts (FSA) are available to employees enrolled in any plan option offered under the Unity Care Member Plan Master Trust, including non-HDHP plans. Employees enrolled in an HDHP with an active HSA may only contribute to a Limited-Purpose FSA (dental and vision expenses only) to preserve HSA eligibility.
Operations contacts HealthEquity to establish an employer account for the new employer group. Required information includes: employer legal name, EIN, plan effective date, plan options offered (to determine HSA vs. FSA eligibility), and employer HR contact details. HealthEquity confirms account activation in writing.
Employer HR configures payroll deduction codes in the payroll system for FSA and/or HSA contributions. Deduction amounts must match employee elections. Operations reviews the deduction configuration for accuracy before the first payroll cycle. Nuwell HR owns this step for the Nuwell employer group.
Employer HR submits employee election data (name, SSN, plan option, FSA/HSA election amount, payroll frequency) to HealthEquity via the enrollment file or HealthEquity's employer portal. Operations confirms HealthEquity receipt and account activation for each enrollee.
Operations ensures the HealthEquity eligibility file feed from Allied is active and accurate. Allied transmits enrollment data (including plan option) to HealthEquity on the standard feed schedule. Operations confirms the first feed transmission is received and processed correctly.
Employer HR distributes HealthEquity welcome materials and debit card instructions to enrolled employees. Operations confirms distribution is complete before the plan effective date.
The IRS publishes annual FSA and HSA contribution limits each fall (typically October/November). Operations must ensure all payroll deductions and HealthEquity account limits are updated before January 1 of the new plan year.
| Account Type | Limit Source | Update Deadline | Owner |
|---|---|---|---|
| HSA (self-only and family) | IRS Rev. Proc. (published fall) | Payroll updated before January 1 | Employer HR / Operations |
| FSA (health care) | IRS Rev. Proc. (published fall) | Open enrollment elections must comply with new limits | Employer HR / Operations |
| FSA (dependent care) | IRS (typically unchanged) | Confirm limit annually; update if changed | Employer HR |
FSA and HSA election changes mid-year are only permitted upon a qualifying life event (QLE). QLEs include: marriage, divorce, birth or adoption of a child, death of a dependent, change in employment status (self or spouse), change in dependent care needs, and loss or gain of other coverage.
Operations monitors the HealthEquity file feed from Allied on a monthly basis to ensure eligibility accuracy:
If an employee contributes more than the IRS annual limit to their HSA or FSA, the excess must be corrected to avoid tax penalties.
| Account Type | Consequence of Excess | Correction Deadline | Correction Method |
|---|---|---|---|
| HSA | Excess contributions subject to income tax + 6% excise tax (IRC §4973) | April 15 of the following tax year (or October 15 with extension) | Withdraw excess + earnings from HealthEquity before tax filing deadline. HealthEquity issues corrected Form 5498-SA. |
| FSA | Elections above IRS limit are non-compliant; employer must correct the plan document / election | Before excess is received / first payroll of plan year | Employer HR corrects the payroll deduction; HealthEquity notified; excess election reversed. |
If Operations or employer HR identifies an HSA over-contribution: (1) Notify the employee in writing identifying the excess amount and applicable deadline. (2) Direct employee to request a withdrawal of excess contributions + attributable earnings from HealthEquity. (3) Employee reports on Form 8889 (filed with personal tax return). (4) Employer HR corrects payroll deduction to prevent future over-contributions. (5) Operations logs the corrective action.