There Is Still Time to Enroll in a 2020 Flexible Spending Account
November 2, 2019 – The Internal Revenue Service regulates Flexible Spending Accounts (FSAs). Unlike other benefits, IRS rules do not allow FSA enrollments to continue from one year to the next. If are currently enrolled in an FSA and want to participate in 2020, you will need to re-enroll. The IRS rules allow an extended enrollment period for FSAs. You still have time to sign up.
Open Enrollment Participants: If you want to participate in an FSA for 2020, download the 2020 FSA enrollment form, complete it and return your signed form by December 6, 2019. You may return your form by December 31, 2019, however your account will not be available until February 1, 2020. Learn more.
New Employees or Newly Eligible for Benefits: If you are a new employee or newly eligible for benefits and your job is on the U-M system after 5:00 p.m. on October 11, 2019, your enrollment for most benefits will continue through December 31, 2020 as long as you remain eligible. However, if you want to participate in an FSA you will need to complete and submit separate forms to participate in 2019 and/or 2020.
- Download the 2019 Flexible Spending Account Deduction Authorization Form for new employees only.
- Download the 2020 Flexible Spending Account Deduction Authorization Form for new employees only.
About Flexible Spending Accounts
The University of Michigan offers faculty and staff the opportunity to pay for eligible health care and/or dependent daycare expenses with pre-tax dollars using a Flexible Spending Account (FSA) administered by PayFlex. An FSA allows you to have a set amount taken from your pay before taxes, which lowers your income tax. The money is put into an account you use to reimburse yourself for eligible expenses.
U-M offers two kinds of FSAs:
- The Health Care FSA is used to pay for most out-of-pocket medical, vision, and dental care expenses for you and your eligible dependents.
- The Dependent Care FSA is for eligible day care expenses for a dependent child age under the age of 13, or elder care for a dependent adult, while you and your spouse work (or if your spouse is a full-time student or disabled).
You can enroll in one type of FSA or both. You contribute tax-free dollars to your FSA(s) through payroll deductions. You can claim amounts equal to your entire annual health care contribution from your Health Care Flexible Spending Account at any time during the year. To receive a reimbursement from your Dependent Care FSA, you must have enough funds in your account to cover the claim at the time you make the request for reimbursement.
PayFlex will mail a debit card to new enrollees in a Health Care FSA to pay for eligible health care expenses. If you are only enrolled in a Dependent Care FSA, you will not receive a card. If you are enrolled in a Health Care FSA and did not receive a card, call PayFlex at 877-343-1346. Learn more about using your PayFlex Card.
The plan year ends on December 31. A grace period allows you to incur eligible expenses up to March 15 of the following year.
"Use it or Lose it" IRS Rule
Contribute to an FSA only the amount you are reasonably sure you will spend annually and file all claims for reimbursement by May 31. In accordance with Internal Revenue Code and supporting treasury regulations, the university uses forfeited funds to pay administration costs of the of the FSA program. In the alternative, forfeitures may also be used by the university to fund employee benefits administration costs, education and benefit election tools, MHealthy coaching and health initiatives, the Emergency Hardship Program, and university scholarship funds.
Benefits of an FSA
Flexible Spending Accounts reduce your annual taxes. Here is an example of possible tax savings with an FSA.
|Annual Savings Example*||With an FSA||Without an FSA|
|If your annual taxable income is:||$28,000||$28,000|
|And you deposit this annual amount pretax into a Health Care Flexible Spending Account:||($1,500)||$0|
|Your taxable income is now:||$26,500||$28,000|
|Subtract federal and Social Security taxes:||($9,447)||($9,982)|
|Subtract after-tax dollars spent on medical expenses without an FSA:||$0||($1,500)|
|Your real spendable income is:||$17,053||$16,518|
|Your annual tax savings is:||$535||$0|
* Potential tax savings shown for demonstration only. Actual savings will vary based on your individual tax situation. Please consult a tax professional for more information.
- For more information on the benefits of FSAs and how to use your accounts, visit the PayFlex website: www.payflex.com
- Connect to a PayFlex customer service agent through the Live Chat feature:
- Once logged into the PayFlex member site, www.payflex.com, select Help & Support at the top of the screen.
- Select Contact Us.
- From the displayed page, click CHAT NOW.
- Agents are available to chat Monday - Friday, 8:00 a.m. - 6:00 p.m. (ET)
- Call PayFlex: (877) 343-1346
- Send claims to:
PayFlex Systems USA Inc.
P.O. Box 981158
El Paso, TX 79998-1158