New coordinators sometimes assume a health FSA works like a savings jar: claim only what has been withheld. That’s how dependent care FSAs generally behave. Health FSAs are different because of the uniform coverage rule.
If someone elects $3,400 for 2026, the plan generally must be willing to reimburse up to $3,400 for qualifying expenses on day one of the plan year — even if only one paycheck has landed.
Why employers feel the risk
An employee who incurs a big January medical expense and terminates in February may have been reimbursed more than they contributed. COBRA continuation for the FSA (when required) and plan terms around participation are how you manage that — not by refusing legitimate early-year claims.
Talking to finance
Uniform coverage isn’t a vendor quirk. It’s a cafeteria plan rule. Budgeting should assume some negative cash-flow timing on health FSAs, especially in small groups where one surgery isn’t averaged away.
If your payroll team ever asks to “only allow claims up to contributions,” that’s a compliance no for a typical health FSA — and a sign it’s time for a quick rules refresher over coffee, not a silent system change.