Flexible Spending Account Eligibility and Enrollment

Eligibility

You are eligible to participate in FSAs as long as you receive a salary and funding for at least four consecutive months from the University of Michigan. See benefits Eligibility and Enrollment for more information.

Flexible Spending Account contributions cannot be taken from a fellowship grant, a stipend, or from temporary hourly paychecks. You must have sufficient earnings to cover the amount you choose to contribute to an FSA.

Enrollment

Determine How Much to Contribute

Determine the annual contribution you want to make to a Health Care account for health, vision, or dental care for you and your dependents, and/or a Dependent Care account for daycare expenses. Keep in mind that you cannot transfer money between the two accounts, and you cannot transfer participation to your spouse. Only expenses incurred on or after your effective date of coverage are reimbursable from your FSA. There is a grace period until March 15 of the following year for you to spend down money in your FSA. You must file claims for reimbursement by May 31 of the following year.

In accordance with Internal Revenue Code and supporting treasury regulations, the university uses forfeited funds to pay administration costs 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.  

Visit the Inspira Financial website to help determine how much to contribute.

Enroll

If you are newly hired or newly eligible for benefits, complete the Flexible Spending Account enrollment form and submit it to SSC Benefits Transactions within 30 days of your hire date or as specified by your collective bargaining agreement.

Effective Date

Your account becomes effective the first of the month following the date the enrollment form is received by SSC Benefits Transactions, your date of hire, or the date you become newly-eligible, whichever is later. (For example, if your date of hire is March 1, and your Flexible Spending Account enrollment form is received March 10, your account becomes effective April 1). For FSA enrollments during the annual benefits Open Enrollment, accounts are effective January 1.

Only eligible expenses incurred on or after your effective date through March 15 of the following year are eligible for reimbursement from your current year FSA.

Payroll Deductions

When you enroll in an FSA, your annual contribution is taken out of your pay in equal amounts over 12 paychecks if you are paid monthly, and over 24 paychecks if you are paid bi-weekly. In months where there are three paychecks, you will not have a deduction taken from the last paycheck. If you enroll mid-year the deductions will be equally split among the remaining paychecks in the year.

Your FSA contributions do not reduce your pay for determining your life insurance, business travel accident insurance, long-term disability, or retirement benefits provided by the university. However, your FSA contributions will lower your Social Security Wage Base. If you earn the Social Security maximum salary ($168,600 or more for 2024), your FSA contributions will lower your FICA Social Security taxes. Since your Social Security taxes will be calculated after your FSA contributions are deducted from your pay, your Social Security benefits may be slightly lowered as well.

You cannot change or cancel your contribution amount during the year unless you have a qualified family status change, such as marriage, divorce, or the birth of a baby, and the change must be consistent with the change in status. For more information, see Making Changes to Your FSA.

Annual Contribution Limits

2025

  • Health Care FSAs: You can contribute a minimum of $120 ($10 per month) up to a maximum of $3,200 per calendar year.
  • Limited Purpose FSAs: You can contribute a minimum of $120 ($10 per month) up to a maximum of $3,200 per calendar year.
  • Dependent Care FSAs: You can contribute a minimum of $120 ($10 per month) up to $5,000 each calendar year. Highly compensated faculty and staff (family gross earnings in 2024 of $155,000 or more) can contribute $3,600 per year.

2024

  • Health Care FSAs: You can contribute a minimum of $120 ($10 per month) up to a maximum of $3,050 per calendar year.
  • Limited Purpose FSA: You can contribute a minimum of $120 ($10 per month) up to a maximum of $3,050 per calendar year.
  • Dependent Care FSAs: You can contribute a minimum of $120 ($10 per month) up to $5,000 each calendar year. Highly compensated faculty and staff (family gross earnings in 2023 of $150,000 or more) can contribute $3,600 per year.

Special Limits for Highly Compensated Faculty and Staff

The IRS allows pre-tax contributions to Flexible Spending Accounts as long as the plan does not favor highly-compensated employees (HCE) as defined by the IRS. For the current plan year, an employee who earns more than $155,000 is considered an HCE.

If you are an HCE, your Dependent Care FSA deduction may not exceed $3,600 per family for a married couple filing jointly, or for a single parent. For an HCE married person filing separately, the limit is $2,500. If you are an HCE and are hired after Jan. 1, or enroll mid-year due to a qualified status change, the amount per year will be 300 times the number of months you will actually be enrolled in the plan.

Maximum Annual Dependent Care FSA Contribution Limits

If your tax filing status is Single, your annual limit is:

  • $5,000 if your 2024 earnings were less than $155,000; however, your contributions may not be in excess of your earned income for the plan year
  • $3,600 if your 2024 earnings were $155,000 or more

If your tax filing status is Married:

  • Filing separately, your annual limit is $2,500 per each spouse.
  • Filing jointly, your annual limit is:
    • $5,000 per year per family if your 2024 earnings were less than $155,000 
    • $3,600 per year ($300 per month) per family if your 2024 earnings were $155,000 or more
  • Your earned income for the plan year, or
  • Your spouse's earned income for the plan year

Dependent Care Tax Credit

Depending on your income, it may be more advantageous to take a Tax Credit when filing your income tax return than paying your expenses through a pre-tax Dependent Care FSA. You may wish to consult a qualified tax advisor.