The HR Role in FSA Open Enrollment

For HR teams and benefits administrators, open enrollment is one of the most operationally intensive periods of the year. Managing FSA slotting — ensuring employees elect the right amounts, within plan rules, and on time — requires careful planning, clear communication, and coordination with your FSA third-party administrator (TPA).

This guide walks through the key responsibilities HR teams face when running FSA open enrollment.

Before Open Enrollment Begins: Preparation Checklist

  • Confirm plan documents: Review your FSA plan document and Summary Plan Description (SPD) for any updates needed before the new plan year.
  • Update contribution limits: Check for IRS annual contribution limit adjustments and update your enrollment system accordingly.
  • Decide on rollover/grace period: If your plan allows a carryover or grace period, ensure the rules are accurately reflected in your benefits portal and communications.
  • Coordinate with your TPA: Confirm data feeds, file formats, and timelines with your FSA administrator so elections are processed accurately.
  • Prepare employee communications: Draft clear, plain-language materials explaining FSA options, deadlines, and how to enroll.

Setting Up Enrollment Slotting in Your Benefits System

Most benefits administration platforms allow HR to configure FSA "slots" — the specific plan options employees can choose from during enrollment. Best practices include:

  • Display the IRS annual maximum prominently so employees don't over-elect.
  • Include helpful prompts (e.g., "Based on last year's elections, consider contributing $X").
  • Ensure dependent care FSA options are clearly separated from health care FSA options.
  • Build in validation rules to prevent elections above the IRS limit or below $0.

Employee Communication Strategies That Work

Low FSA participation is often a communication problem, not a motivation problem. Effective strategies include:

  1. Start early: Send a "benefits season is coming" announcement at least 3–4 weeks before enrollment opens.
  2. Use multiple channels: Email, benefits portal banners, team meetings, and printed materials all reach different employees.
  3. Explain the tax savings: Many employees don't realize how much they can save. A simple example showing reduced taxable income resonates more than abstract percentages.
  4. Host a benefits fair or webinar: Live Q&A sessions dramatically improve understanding and participation.
  5. Send reminder communications: As the deadline approaches, remind employees who haven't yet enrolled.

Managing Qualifying Life Event (QLE) Changes

HR is responsible for processing mid-year FSA election changes triggered by qualifying life events. Key administrative steps:

  • Establish a documented QLE intake process with a clear form or portal submission method.
  • Verify that the requested change is consistent with the nature of the QLE (IRS consistency rule).
  • Process changes within 30 days of the QLE where possible.
  • Communicate the change confirmation to the employee and update your TPA.

Year-End FSA Administration

As the plan year closes, HR must manage the transition carefully:

  • Remind employees of run-out periods (time after plan year end to submit claims for eligible expenses incurred during the plan year).
  • Communicate any grace period or rollover amounts to employees.
  • Coordinate with your TPA on forfeiture processing for any unclaimed balances.
  • Ensure COBRA-qualified beneficiaries are notified of their FSA continuation rights.

Compliance Considerations

FSA plans are subject to IRS, ERISA, and DOL rules. HR teams should work with legal or benefits counsel to ensure:

  • Plan documents are maintained and updated annually.
  • Non-discrimination testing (Section 125) is completed each plan year.
  • Summary Plan Descriptions are distributed within required timeframes.
  • Employee data shared with TPAs is handled in compliance with applicable privacy laws.

Running a well-administered FSA program benefits both employees and the organization. Thoughtful slotting design and clear communication during open enrollment set the foundation for a successful plan year.