Flexible Spending Account FAQs

What is an FSA?
A Flexible Spending Account (FSA) allows you to put aside a set amount of money from your paychecks before taxes to pay for certain specific health care or dependent care expenses, which lowers your income taxes.
What is the main advantage of an FSA?
The main advantage of an FSA is the tax savings it offers. An FSA enables you to pay for eligible out-of-pocket expenses with money you set aside from your pay before any taxes are taken out. Without an FSA, you would still pay for these expenses, but you would do so using money remaining in your paycheck after taxes are withheld.
What is the difference between a Health Care FSA and a Dependent Care FSA?
  • Health Care FSAs cover eligible health-related expenses for you and your dependents that are not covered or reimbursed by your health plan, dental plan, vision plan, or any other type of insurance.
  • Dependent Care FSAs are used to pay for eligible child care expenses for children under age 13, or day care for anyone who you claim as a dependent on your Federal tax return who is physically or mentally incapable of self-care, so you and your spouse work (or if your spouse is a full-time student or disabled).The Dependent Care FSA is not for health care expenses for your dependents.
If I participated in a Health Care FSA, do I need to report anything on my personal income tax return at the end of the year?
No. There are no reporting requirements for Health Care FSAs on your income tax return.
If I participate in the Dependent Care FSA, do I need to report anything on my personal income tax return at the end of the year?
Yes. You must identify all persons or organizations that provide care for your child or dependent by filing IRS Form 2441-Child and Dependent Care Expenses, (see Instructions for IRS Form 2441), along with your Form 1040 each year (or Schedule 2 for Form 1040A). Please consult your tax advisor if you have specific questions.
How can I find out my FSA balance?
Or log on to your account on www.payflex.com, or access the PayFlex Mobile app on your smartphone.
How do I get reimbursed from my FSA?
As you incur eligible health care expenses and/or dependent day care expenses throughout the year, you can get reimbursed from your Health Care FSA or Dependent Care FSA by submitting a claim. Or use your PayFlex Card to pay for eligible health care expenses directly from the available funds in your Health Care FSA.
After I enroll, what is the effective date of my FSA?
  • If you are a newly hired or newly eligible faculty or staff member, your enrollment becomes effective on the first day of the month following the date SSC Benefits Transactions receives your enrollment form or the date of eligibility, whichever is later, and it remains in effect until December 31 of that year.
  • If you are a continuing faculty or staff member and you enroll during annual Open Enrollment in the fall, your election will be effective from January 1 through December 31 of the following calendar year.
Can I change my contributions after I enroll in an FSA?
Due to IRS regulations, your enrollment and contribution amount remains in effect for the plan year, unless you have a qualifying family status change, such as a marriage, birth or death of a dependent, for example. See Making Changes to Your FSA for more information
Once I enroll, does my enrollment continue the through the next year?
No. FSAs are an IRS-regulated benefit, and your FSA enrollment does not carry over from year to year. Your contributions end on December 31. You will need to enroll in an FSA during each annual benefits open enrollment period if you wish to participate in an FSA for the following calendar year.
What happens to the funds left in my account at the end of the year?
If you have a balance in your FSA at the end of the calendar year, there is a "grace period" to March 15 of the following year to allow you to to incur eligible expenses to spend down your remaining FSA funds. You have until May 31 to file claims for eligible expenses. Flexible Spending Accounts are "use it or lose it" plans. IRS regulations require that any funds left in your account as of June 1 remain with the plan and regulations do not allow employers to return these unused funds to you. The University of Michigan applies any unused funds to the administration fees of the plan.
Why doesn't the U-M FSA plan allow a carryover of unused funds?
Under the IRS rules, a plan may allow either the grace period or a carryover of a limited amount of unused funds, but it cannot allow both. The University of Michigan plan provides a grace period.
What happens to my FSA if I leave U-M?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows you to continue your Health Care FSA with after-tax contributions even after losing your eligibility to participate (for example, due to termination of your employment). To submit claims for expenses incurred after you become eligible for COBRA, you must continue your FSA through COBRA.

During periods when you are not receiving a salary from U-M, you can contribute to a Health Care FSA, but you cannot contribute to a Dependent Care FSA. Such periods include a leave of absence (Leave), reduction in force (RIF), and a leave under the Family Medical Leave Act (FMLA). During these periods you can continue to submit claims for eligible expenses incurred; the procedures vary depending on the type of account.

Call the SSC Contact Center at 734-615-2000 or 866-647-7657 (toll free) for more information.

Who do I call if I have questions about my FSA?
Call PayFlex at the dedicated line for U-M faculty and staff members: (877) 343-1346.