Tax-Advantaged Plans Updates (2026) Webinar (10.07.25)-2026 Updates on Tax-Advantaged Plans

2026 Updates on Tax-Advantaged Plans - Q&A (100725)

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The document provides follow-up clarifications from a WASBO/HCA webinar (10.07.25) about the SEBB Collective Bargaining Agreement (CBA) flexible spending arrangement (FSA) benefit and related eligibility rules.<br /><br />Funding: The SEBB CBA FSA benefit will be paid through the SEBB funding rate, not billed separately to individual school districts. The Legislature increased the 2025–27 biennial funding rate to cover the estimated cost for employees who meet the benefit’s eligibility criteria.<br /><br />Carryover and re-enrollment: If an employee has a remaining FSA balance between $120 and $660 (example: $130 on 12/31/2025), that amount will carry over to the next plan year even if the employee does not re-enroll. However, if they do not actively re-enroll, the carried-over amount will create an FSA for use in the next year but the employee cannot elect new payroll deductions for that plan year. If enrolled in UMP High Deductible with an HSA, carryover would instead establish/add to a Limited Purpose FSA under the same rules.<br /><br />Employer contribution: Per the CBA, in January 2026 and January 2027, the employer will make available $200 in an FSA for each eligible employee meeting specific criteria. Any funding beyond January 2027 would require new bargaining.<br /><br />Eligibility: Substitute employees may qualify if they meet SEBB program eligibility and the “earnable compensation” threshold based on Department of Retirement Systems (DRS) records. The $40,000 cap applies to total earnable compensation reported to DRS by all SEBB employing agencies (all districts), not just one district.<br /><br />Reporting and waivers: The benefit will not be included in an HCA-provided W-2 reporting file. Employees may still qualify even if they waive medical to enroll as a dependent on another SEBB non-high deductible plan, but not if they are a PEBB dependent.<br /><br />Medicare: Medicare-eligible employees can have FSA/DCAP if SEBB-eligible, but those with Medicare Part A or B cannot enroll in UMP High Deductible with an HSA.

Keywords

SEBB CBA FSA benefit

WASBO HCA webinar follow-up

SEBB funding rate 2025–27 biennium

FSA carryover $120-$660

FSA re-enrollment and payroll deductions

Limited Purpose FSA with HSA

Employer $200 FSA contribution January 2026/2027

Substitute employee eligibility earnable compensation DRS

$40,000 earnable compensation cap across districts

Medicare eligibility FSA DCAP and UMP High Deductible HSA restriction