Help! My company dropped FSAs and I’m still seeing regular payroll deductions

Flexible Spending Account Question of the Week


My company recently decided to drop Flexible Spending Accounts (FSAs) and went with a different form of health coverage for myself and my fellow employees. While I’m going to miss the ability to make tax-free purchases on a bunch of items I use all the time, I figured it was just business at work. However, very recently I checked one of my pay stubs and found that money was still being taken out of my check under a charge called “Cafeteria Plan.” I have no idea where this money is going, and I can’t use it for any health or dependent-related expenses. Is my company ripping me off, and even worse, will this get me in trouble with the IRS?Thank you! -Julie A., Reading, PA

Hi, Linda!

Believe it or not, these situations are more common than you think when companies choose to drop FSAs, but this is something that you should talk with your benefits administrator about immediately. If you are enrolled in a company medical insurance plan, this could simply be your monthly contribution to this plan, but if it is the same amount as you paid before when you were using an FSA, this is something that will need to be remedied.

Most likely, this sounds like a clerical mistake, as taking money out of your paycheck for anything other than the benefit you signed up for is illegal. Simply make an appointment with your benefits administrator to find out the source of the issue, and your employer will be obligated to pay you back those lost funds, which will be taxed like your other wages. As for the IRS, they won’t come after you for money that you never actually received, so this is purely an issue between you and your employer.

Thanks for being an customer and be sure to come and visit us if you begin using an FSA again in the future!

- Customer Service

Ask us a Question:

If you have a question about Flexible Spending Accounts, feel free to leave a comment below. We're happy to help answer any questions you may have.