Seymour adds optional flexible spending account for employees with $660 starter cap

The Seymour City Council on Thursday voted to add an optional flexible spending account (FSA) for city employees and set a $660 maximum enrollment contribution for the first year. Council members approved the change after a presentation by John Davis, who recommended a low initial cap to evaluate uptake and minimize potential liabilities.

Davis told the council that 15 of 27 insured employees returned a survey indicating interest. He explained how the FSA would work: the city’s FSA administrator would fund participants’ accounts up front, employees would repay the elected pretax contribution through payroll deductions, and payroll tax savings would reduce employer and employee tax liability. Davis recommended a $660 maximum for year one; that level would equate to about $25.83 in payroll deductions per pay period for an employee using the full amount.

City staff said there is a one‑time $50 setup fee for the group and a small participant administrative charge (about $3.70 per month) that would be deducted from employee pay. Davis warned of a potential liability if an employee separates after the administrator has advanced funds exceeding payroll contributions; he proposed a signed participation agreement requiring repayment from final wages or a structured repayment plan.

Council adopted the FSA program and the $660 cap by motion and second. Council members said staff may expand or adjust limits in future years if demand and usage patterns justify a change.

What happens next: human resources will process enrollment paperwork for interested employees and finalize the group setup with the administrator. Staff will return if the council chooses to change the cap or add a dependent‑care FSA in a later year.