Notions 101
Flexible spending accounts (i.e., remote work, child care), health reimbursement arrangements, lifestyle spending accounts, commuter benefits, and rewards programs are all considered notional accounts. Here’s a quick overview:
The notion of a balance. Notional accounts display a balance for funds deposited elsewhere, giving the “notion” of a balance. Notional accounts help track financial activities without funds necessarily moving.
Employer-sponsored. Notional accounts are employer-sponsored plans where employers are responsible for covering employee expenses. For that reason, notional account cash balances are primarily maintained at the employer level.
Employer funding of notional benefits
Initial required deposit
Each employer is required to maintain a deposit with First Dollar. The amount of this deposit will be determined in accordance with the guidelines below and must be received by First Dollar prior to the start of a new plan year. First Dollar will invoice the employer for the initial deposit, including the calculation used to determine the amount.
Weekly payment for all spend
In addition to the required deposit, employers will send a weekly ACH to First Dollar to cover all notional account spend that occurred in the prior seven days—this includes all card transactions and claim reimbursements.
When spend exceeds deposits
Language note
A member is an individual. You may also know members as employees, participants, or consumers. (They’re called members because they are members of an organization.)
If notional account spending exceeds the employer’s deposit, member notional spend (e.g., card transactions and claim reimbursement) cannot be processed. If this case arises, employers will:
Receive timely notification via email to send funds to cover the unpaid spend balance.
Be required to increase their required deposit amount.
Payment options
Employers have two options for payment of notional benefit transactions: ACH Push or ACH Pull.
Employer ACH Push
Employers will receive an email each week that includes a detailed listing of transactions that occurred the prior week, payment instructions, and the amount owed for the prior week’s transactions. When an email is received, the process for sending funds is initiated by the employer. Funds are due the next day. The employer must send First Dollar the amount requested for payment for transactions on a weekly basis throughout the plan year.
First Dollar ACH Pull
The employer will receive an email each week that includes a detailed listing of transactions that occurred the prior week, payment instructions, and the amount owed for the prior week’s transactions. When an email is sent, First Dollar will automatically pull the funds from the employer’s bank account. This will occur weekly throughout the plan year.
Pull Failure
If an ACH pull fails, the employer will receive an email requesting a wire by the end of the day. The system is programmed to pause paying claims if there are insufficient funds in the employer's RMF account.
Return of required deposit
First Dollar will hold the required deposit until the filing period for member spend ends (i.e., the end of a notional’s grace and/or run-out period). After the end of the filing period, the required deposit for the plan year is closed, and the funds are sent back to the employer. First Dollar collects a separate required deposit for each plan year, regardless of whether the plan year overlaps with the grace/run-out period.
Determination of the required deposit amount
Total PPT elections
The total potential spend for a notional account in a plan year. Total participant elections account for all enrolled employees and their elected benefit amounts.
Notional benefit types and required deposit
Below is an outline of how the required deposit amount will be calculated for each notional benefit type.
Note: 10% has been included in each calculation as the standard percentage used to calculate the required deposit. However, percentages are subject to change based on plan size and funding method. See the table below at the bottom of this document for details.
Notional Benefit | Required Deposit |
Commuter | 100% funded at time of contribution |
Dependent Care DC-FSA | 100% funded at time of contribution |
General Health FSA | Required deposit = Total PPT Elections x 10%
|
Health Reimbursement HRA | Upfront Funding Required deposit = Total balance of the plan at the start of the plan year x 10%
Periodic Funding First Dollar will review the Plan Document and propose an appropriate calculation based on the design. |
Lifestyle Spending LSA
| Required deposit = Total PPT Elections x 10% |
Rewards (earned, no guaranteed funding) | Funded when a member successfully completes a task that earns their reward. Funded in the amount of the reward the member has earned. Funding takes place as rewards are granted to members (at minimum, on a monthly basis). No initial deposit is required. |
Required deposit and frequency of funding
| Daily | Weekly* | Monthly | Upfront |
Required Deposit | 2% (FD pull) 4% (ER push) | 4% (FD pull) 6% (ER push) | 10% | 100% |
Timing of Payment | ACH is generated the morning of the following business day for the prior day’s spend | ACH is generated on Monday morning as a same-day ACH | ACH is generated by the second day of the month | ACH is generated prior to the plan year start date |
Communications | Daily email sent in the morning with the prior day's spend | Weekly email sent on Sunday with prior week’s spend | Monthly email sent on the first day of the month with prior month’s spend | Ad hoc, as new employees are enrolled |
Communication with employers
Initial launch email (one-time)
First Dollar will invoice the employer for the amount of the initial deposit, including the calculation of the required deposit.
Transaction listing emails (weekly)
The employer will receive an email each week that includes a detailed listing of transactions that occurred the prior week, payment instructions, and the amount owed to First Dollar for the prior week’s transactions.