Forma requires account pre-funding in the following cases:
- To reimburse approved pre-tax claims
- For pre-tax Forma Card expenses
- To reimburse approved employer-sponsored claims when using direct deposit as the reimbursement method
- For employer-sponsored Forma Card expenses
Pre-funding ensures funds are available for claim reimbursements and card transactions.
Determining the pre-fund amount
The pre-fund amount is calculated based on predicted annual spend:
- Total annual elections for FSA, LPFSA, and DCFSA
- Total monthly elections for Transit and Parking multiplied by 12
- Total annual stipend amounts for employer-sponsored programs
- Total annual stipend amount for HRA programs
Once the predicted annual spend is determined, the pre-funding amount will be calculated by Forma. Forma's team will perform top-ups to maintain the predetermined pre-fund threshold.
If the deposit account funding drops below a certain percentage, Forma will ask your team to deposit additional funds to maintain a higher minimum balance. This threshold is recommended to be 40% of the annual initial pre-fund amount.
For example, if the projected annual spend is $100,000, the initial pre-funding amount will be $100,000 x 10% = $10,000 and the threshold will be $10,000 x 40% = $4,000
If the deposit account balance drops below $4,000 Forma will ask to deposit additional funds into your account as a one-time request.
Example
A company offers the following benefits:
- FSA, LPFSA, and DCFSA with a total annual election of $2,500,000
- Transit and Parking with a total monthly election of $200,000
- LSA with a monthly stipend of $100, 1,000 US employees are eligible. Forma card is enabled under the LSA program
The predicted annual spend is $2,500,000 + (200,000 x 12) + ($100 x 12 months x 1,000 employees) = $6,100,000. The pre-fund amount will be $6,100,000 x 10% = $610,000. This is the amount to be added to the deposit account prior to the program start date and will be maintained via top-ups throughout the program year.