The Uniform Coverage Rule is a unique feature of healthcare Flexible Spending Accounts (FSAs) that affects how and when funds are available.
From the Employee’s Perspective:
When you enroll in a healthcare FSA and choose your annual contribution amount, the full amount is available to you on the first day of the plan year—even though you haven’t finished paying into it yet.
For example, if you elect to contribute $3,000 for the year, you can use the entire $3,000 starting on January 1, even though you’ll repay that amount gradually through payroll deductions over the course of the year.
This can be especially helpful if you have large, early-in-the-year expenses like surgery, dental work, or new eyeglasses.
From the Employer’s Perspective:
Employers are required to make the full annual FSA election available to the employee right away, even if the employee leaves the company before repaying the full amount. That means the employer is essentially fronting the money and then recouping it through equal payroll deductions throughout the year.
If an employee uses their entire FSA balance and then quits mid-year, the employer may be unable to recover the unpaid portion—this is a built-in risk of offering an FSA.
This rule only applies to healthcare FSAs. Dependent care FSAs are funded differently—those funds become available only as they’re contributed through payroll deductions.