When you enroll in a Health Care FSA, you can be reimbursed for eligible health care expenses that were incurred for you, your spouse, your children, and any other person who is a qualified dependent under the Internal Revenue Code. The IRS defines eligible health care expenses as expenses incurred for medical care, including amounts paid for the diagnoses, care, mitigation, treatment, or prevention of disease or illness and for treatments affecting any part or function of the body. This includes dental and vision care. Generally, with the exception of expenses for cosmetic procedures and health insurance premiums, any health care expense that is tax-deductible and not covered by insurance is eligible for reimbursement through a Health Care FSA. See the PayFlex Eligible Expense Items for more information.
View a brief video to learn more about Health Care FSAs and how they work. Please note that the Health Care FSA annual limit is $2,850 for 2023.
You can only be reimbursed for expenses incurred while you are enrolled in the plan. The date you pay for the item or service is not relevant.
Please note: If you enroll in the Consumer-Directed Health Plan (CDHP) and currently have a Health Care FSA, you must spend your remaining balance AND have all claims processed by December 31, 2023. Your balance MUST be $0.00. Otherwise, you will NOT be eligible for HSA contributions until Apr. 1, 2024.
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. See Using Your PayFlex Card for more information.
Eligible Health Care Expenses
Note: This list is only an example and is subject to change. See a comprehensive list of eligible expenses on the PayFlex website.
Eligible Health Care FSA expenses include, but are not limited to:
- Personal protective equipment (PPE), March 31, 2021 update: The IRS released Announcement 2021-7 confirming the purchase of personal protective equipment (PPE), such as face masks, hand sanitizer and sanitizing wipes, are qualified medical expenses if used for the primary purpose of preventing the spread of coronavirus. Expenses incurred on or after January 1, 2020 can be reimbursed by a Health Care FSA.
- COVID-19 home test kits
- Physician's office/clinic visit copays
- Dental care including copays, fluoride treatments, orthodontia See Paying for Eligible Dental Expenses for tips.
- Vision Care (exams, glasses, contacts, solutions)
- Hearing Care/Hearing Aids
- Prescription Drugs (including copays)
- Over-the-counter medications (with a prescription)
- Immunizations/Well Baby Care
- Mental Health Care
- Laboratory Tests
- The cost of a home diagnostic kit, test or device is an eligible medical expense. Examples include, but are not limited to: blood pressure monitors, cholesterol test, colorectal screenings, diabetic equipment and supplies, pregnancy tests.
The following are examples of some expenses that are not eligible for reimbursement from a Health Care FSA:
- Cosmetic surgery
- Diaper service
- Ear piercing
- Expenses claimed on your income tax return
- Expenses reimbursed by other services, such as insurance companies
- Hair loss treatment, drugs or transplants
- Health care expenses paid under any health plan
- Household help, even if recommended by a physician
- Insurance premiums
- Illegal treatments, operations, or drugs
- Late payment fees
- Marriage counseling, unless performed for purpose of alleviating or preventing a physical or mental defect or illness
- Herbal remedies
- Social activities, such as dance classes, even if recommended by a physician
- Teeth whitening
- Vitamins/nutritional supplements (only eligible if necessary to treat a specific medical condition and accompanied with a Letter of Medical Necessity)
- Weight reduction programs for general well being
Note: This list is only an example and is subject to change. Comprehensive information on ineligible expenses is available from PayFlex.
Limited Purpose FSA
Limited Purpose FSA is just like the Health Care FSA except it can be used only to pay for vision, dental, and orthodontic expenses such as dental implants, Invisalign orthodontics, adult braces, prescription sunglasses and LASIK surgery. It cannot be used to pay for health care expenses. For a list of covered FSA expenses, visit payflex.com.
Important Information About Enrollment
- If you enroll in the Consumer-Directed Health Plan (CDHP), you can ONLY enroll in the Limited Purpose FSA.
- If you enroll in any other U-M Health Plan you can enroll in the Health Care FSA.
Estimate Your Annual Expenses Carefully
Use the PayFlex Savings Calculator to help you determine your estimated annual expenses that could be reimbursed from a Health Care FSA. Once enrolled you cannot change your annual contribution limit or cancel participation unless you experience a qualified family status change.
If you pay out-of-pocket for eligible expenses, you may file a claim for reimbursement after you or your eligible dependents receive health care services or you make eligible purchases. The entire annual contribution is available for reimbursement at the FSA effective date, even if you have not made all of your contributions from your paychecks yet.
You have the option of submitting a claim online or completing a paper claim form and mailing or faxing it along with your itemized documentation. There is also a PayFlex Mobile app for filing claims using your smartphone. See Submitting Claims for Reimbursement for details on filing claims.
If you use your PayFlex Card to pay for eligible expenses, it works as a credit card, only the funds are deducted from your FSA, and you have to have the full amount in your Health Care FSA to cover the bill. You do not need to file claims when you use the card, but you will need to provide itemized receipts to PayFlex later on to verify transactions. Request and keep all receipts when using your PayFlex Card. See Using Your PayFlex Card for details.
File all claims by May 31 of the following year. According to IRS rules, any money left in your Health Care FSA on June 1 following the plan year is forfeited. 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.