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S 3883

Relates to dispensing certain controlled substances for use by a person with a substance use disorder

2025 Regular Session Introduced by Pat Fahy and 2 co-sponsors

The bill requires public employer cafeteria plans to cap FSA salary reductions at the federal inflation-adjusted §125(i) limit, applied to state, local, and school plans.

ADVANCED TO THIRD READING
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WeVote Research Nonpartisan
Bill Summary · S 3883

Summary — S.3883 (Introduced Version / S3883A print)

Short title / note on discrepancy: Although the bill title provided references dispensing controlled substances, the text of S.3883 (Introduced Version / S3883A print) amends public-employee statutes to require that salary reductions used to fund flexible spending accounts (FSAs) follow the annual, inflation‑adjusted dollar limitation set in federal law (26 U.S.C. §125(i)). This summary reflects the bill text.

Purpose and intent

Require State, local government, and school district employer-sponsored cafeteria plans to limit employee salary-reduction contributions to FSAs using the annual dollar cap specified and adjusted for inflation under federal law (Internal Revenue Code §125(i)). The goal is to align public‑employer FSA contribution limits with the federal, inflation‑adjusted limit.

Key provisions

  • Amends three statutes to impose the federal §125(i) limitation on public‑employee FSA salary reductions:
    • C.52:14-15.1a (State employees / State Treasurer and independent State authorities)
    • C.18A:16-19.1 (boards of education / school district employees)
    • C.40A:10-23.5 (local units of government and their instrumentalities)
  • Requires each employer’s cafeteria plan to:
    • Provide a salary reduction arrangement for payment/reimbursement of unreimbursed medical/dental expenses (and may include dependent care under IRC §129 and other §125-consistent benefits);
    • Set the FSA contribution (salary reduction) limit equal to the federal limitation under IRC §125(i), which is adjusted for inflation annually.
  • Clarifies treatment of salary reductions:
    • Such reductions continue to be treated as regular compensation for other purposes (including calculation of pension contributions and retirement allowances).
    • To the extent permitted by federal law, the reductions are excluded from the computation of federal income tax withholding.
  • Effective date: the act would take effect immediately upon enactment.

Who is affected

  • Public employees of the State, independent State authorities, school districts, and local governments who participate in employer‑sponsored FSAs.
  • Employers (State agencies, local units, school boards, authorities) that sponsor cafeteria plans — payroll administrators and benefits managers will need to ensure plan limits mirror the federal annual adjustment.
  • Pension systems and payroll tax administrators for application of compensation and withholding rules.

Fiscal and practical impacts

  • Employee-level: May allow higher annual pre‑tax FSA contributions if the federal inflation adjustment increases the cap (example: the 2024 federal cap was $3,200).
  • Employer / government: Minimal administrative updates to plan documents and payroll systems to adopt the federally adjusted cap each year. Tax withholding and payroll reporting processes may require routine updates.
  • Pension impacts: The bill explicitly maintains that salary reductions count as regular compensation for pension/retirement calculations, so pensionable salary treatment is unchanged.

Legislative status (as provided)

  • Introduced: November 18, 2024
  • Committee referrals and actions: Referred initially to Senate State Government, Wagering, Tourism & Historic Preservation Committee; referred to Health (Assembly). Print number S3883A issued; reported and committed to Finance; ordered to third reading; committee discharged and committed to Rules.
  • Passed Senate: May/June 2025 (listed as passed Senate 06/05/2025)
  • Delivered to Assembly: 06/05/2025; referred to Assembly Health Committee (06/05/2025)
  • Companions / related: A.1647 and A.5432 (companion Assembly bills); S.9926 (prior session)

Note: Check official legislative sources for final bill text and any amendments in the Assembly (or enactment) and for up‑to‑date federal §125(i) dollar limits each year.

Compiled from official sources — confirm details with the bill’s official record.

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