How to Start the Plan Year Right: Tips for HSA, HRA, FSA and LSA Plan Sponsors

Taking proactive steps now can help your new HSA, HRA, FSA and/or LSA plan year run efficiently all year long. In this article, we will review the recommended steps for starting each new plan year.

Confirm Employer Portal Access

The start of the year is a perfect time to review and update your team’s access to the employer portal. Verifying access ensures your team can manage essential tasks without delay when critical actions, such as employee enrollments and contributions, arise. Here are a few questions to guide your review:

• Are there new team members who need access?
• Does access need to be removed for former team members?
• Are team members able to view the appropriate company divisions, access reports and update employee enrollments?

A quick audit now prevents future delays in managing employee data.

Update Employee Records

Keeping employee records accurate is not just about compliance; it’s about optimizing your plan's efficiency. Ensuring that only eligible, active employees are included in the system has multiple benefits:

• Your company only pays fees for active employees.
• Contributions and claims are correctly processed.
• Reporting will reflect actual plan engagement and usage, helping you understand true participation and utilization rates.

This is a simple yet essential step that can save time and prevent unnecessary costs throughout the year.

Audit Employee Plan Enrollments

Open enrollment is often fast-paced, and mistakes can happen. Correcting those mistakes early in the year is much easier than addressing them later. Begin by comparing the enrollment records in your Third-Party Administrator (TPA) portal with your own records. Here’s what to check:

• Have all participants been added to the system?
• Are they enrolled in all the plans they selected?
• Do the election amounts match the amounts they chose?

Taking this step ensures your employees are set up correctly from the beginning, preventing issues down the line.

Common Enrollment Mistakes

Enrollment mistakes are more common than you might think. It’s helpful to give employee elections a second look to identify any discrepancies. Here are some frequent errors:

• Electing dependent care without having eligible dependents.
• Choosing parking reimbursement accounts instead of mass transit when applicable.
• Enrolling in a full-purpose FSA while also participating in an HSA, which requires a limited-purpose FSA.
• Selecting contribution amounts that seem disproportionately high for the employee’s salary.

If You Find an Error, Act Quickly!

If you discover an error in an employee's elections, the IRS allows changes only under very specific circumstances. According to IRS guidelines, elections can only be changed if there's “clear and convincing evidence of an error.” Common examples include:

• An employee electing dependent care without having eligible dependents.
• Data entry errors where the recorded election doesn’t match the employee’s intent.

If an error is found, notify your HSA, HRA, FSA or LSA administrator right away. They should have a clear process in place to handle these cases. Always document the error, the correction and get employee sign-off where appropriate. This protects your company and ensures compliance.

Verify Payroll Deductions

Once you’ve confirmed that your administrator’s records match your employees’ elections, it’s time to verify payroll deductions. Ensure the following:

• Are all participants set up for payroll deductions in your payroll system?
• Are the deduction amounts correct?

Taking this step early will prevent deduction-related issues that could arise throughout the year, saving your team time and effort.

Educate Employees on Best Practices

A successful plan year doesn’t only rely on what you do—your employees have a part to play as well. Encouraging them to engage with their benefits helps them maximize the value of their accounts. Here’s how employees can contribute:

• Logging into the participant portal and app: Regular access to their account information helps employees monitor balances, submit claims and stay informed.
• Securing their account: Setting up strong passwords and enabling multi-factor authentication helps prevent fraud.
• Updating communication preferences: Employees can receive important notifications the way that works best for them.
• Linking personal bank accounts: This enables quick and secure reimbursements.
• Transferring old HSAs: Consolidating HSAs from previous employers or administrators simplifies account management and may reduce fees.

Consider sharing an educational article with employees to reinforce these best practices: Associated Bank: Start the Plan Year Off Right.

Get Ready for a Great Plan Year

Taking these steps now will help ensure a smooth plan year for your team and participants alike. Don’t wait—start the year off right by confirming access, updating records, verifying enrollments and educating your employees. A little effort now will pay off in smoother operations and fewer headaches down the road.

For any questions about your HSA, HRA, FSA and LSA plans—or if you’re looking for a new plan administrator—reach out to our team at 800-991-7703 or BenefitsConnectionSales@AssociatedBank.com. We’re here to help ensure you have the support and tools to manage a successful plan year.

Find out why so many employers choose Associated Benefits Connection for their plan administration needs!