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 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.
Flexible Spending Account Book
- 2023 Flexible Spending Accounts - effective January 1 - December 31, 2023.
Enroll in an FSA
Looking to enroll in an FSA? Download and complete an enrollment form. Unlike other benefits, IRS rules do not allow FSA enrollments to carry over from year to year. You need to enroll in an FSA each year you wish to participate.
2023 Flexible Spending Account Limits
Health Care FSAs
You can contribute a minimum of $120 up to a maximum of $2,850 per calendar year to your Health Care FSA.
Dependent Care FSAs
You can contribute a minimum of $120 up to $5,000 each calendar year to your Dependent Care FSA. Highly compensated faculty and staff (family gross earnings in 2022 of $135,000 or more) can contribute $3,600 per year.
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.
April 2022 Update: PayFlex to be acquired by Millennium Trust Company
On April 6th, 2022, it was announced that Millennium Trust Company has entered into an agreement to acquire PayFlex. All Flexible Spending Account members received a communication, from Payflex, regarding the acquisition.
Here are some key points regarding the acquisition:
- There will be no disruption with your PayFlex account.
- PayFlex will continue to be the administrator for your account.
- If you have a PayFlex debit card, it will remain active and you can continue to use it for your eligible health care expenses.
- The PayFlex call center remains at your service through the same toll-free number you use today.
- You’ll continue to access your account online or through the PayFlex Mobile® app just as you do today.
IRS "Use It or Lose It" Rule
Contribute to an FSA only the amount you are reasonably sure you will spend annually and file all claims for reimbursement by the deadline.
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.
- Connect to a PayFlex customer service agent through the Live Chat feature:
- Once logged into the PayFlex member site, 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 8396
Omaha, NE 68108-0396