What is a Flexible Spending Account (FSA)?
An FSA is a benefit that enables you to set aside pre-tax dollars from your paycheck to pay for eligible health care and dependent care expenses.
General Purpose Health Care (GPHC) FSA is the standard Health Care FSA that the State traditionally has offered and will continue to offer. This FSA can be used for eligible health, prescription, dental, and vision expenses. Per IRS guidelines, an individual may not be enrolled in both a General Purpose Health Care FSA and an HSA. Click the following link to view General Purpose Health Care FSA Eligible Expenses.
Limited Purpose Health Care (LPHC) FSA is a Health Care FSA that can be used for eligible dental and vision expenses and is compatible with the new State HDHP with HSA or any other HSA enrollment. This FSA was added for employees ineligible for the GPHC FSA. Click the following link to view Limited Purpose Health Care FSA Eligible Expenses.
Dependent Care (DC) FSA allows you to put aside payroll-deducted pre-tax dollars to cover eligible child and elder- care expenses for your eligible dependents, so you can attend work, find work, or attend school. Click the following link to view Dependent Care FSA Eligible Expenses.
Note: The Dependent Care FSA may not be used for medical expenses.
You can choose to enroll in one or both of these types of FSA plans as long as you have enough money in your paycheck to cover the amount you choose to contribute to an account.
- When is the 2021 Flexible Spending Account (FSA) Open Enrollment period?
Flexible Spending Account (FSA) Open Enrollment is included as part of Benefits Open Enrollment starting fall 2020, allowing for a single, annual, comprehensive open enrollment period that combines both insurance benefit and FSA enrollments.
This year BOE Part 2 will include FSA Open Enrollment and will run from November 2, 2020 until 11:59 p.m. on November 24, 2020. This enrollment is for the 2021 plan year, which runs from January 1, 2021 to December 31, 2021.
The Grace Period for the 2021 Dependent Care FSA runs through March 15, 2022. The run-out period deadline for providing claim substantiation ends March 31, 2022 for the Dependent Care FSA and both types of Health Care FSAs. Both the General Purpose Health Care FSA and the Limited Purpose Health Care FSA include the Carryover option. View the Health Care FSA with Carryover FAQs for more information.
- How do I contribute to an FSA?
When you enroll in an FSA, you will decide how much money you would like set aside for the plan year. This amount is considered your Annual Goal and will be deducted from your check pre-tax and placed into your FSA. You can determine the amount you’d like to contribute to your FSA in one of two ways:
Determine your Annual Goal and divide it by the number of pay-periods in which you would like it to be deducted from your paycheck. There are 26 pay-periods in a year; you can select anywhere from 1 to the entire 26. This will give you the amount per pay-period you will have deducted from your paycheck, in order to reach your Annual Goal.
Decide the amount per pay-period you can afford to have deducted from your paycheck, then multiply that by the number of pay-periods you would like to have the deduction come out (1-26). This will give you your Annual Goal for the plan year.
- How do FSAs save me money?
Throughout the plan year, you use the money that was deducted from your paycheck and contribute to your FSA to pay for eligible health care or dependent care expenses. These are expenses that you would have to pay out-of-pocket, even if you didn’t have an FSA (e.g., day care bills, copays, eyeglasses, dental care, and more). But with the use of an FSA, you are now using money that you did not have to pay taxes on to do so. Without an FSA, you would pay taxes on the money you use to pay for these eligible expenses, costing you more out-of-pocket. Review the How FSAs Can Save You Money resource document for additional information.
- How much can and should I contribute to an FSA?
The 2021 plan year maximum contribution for a General Purpose or the Limited Purpose Health Care FSA is $2,750 per year. The maximum contribution for a Dependent Care FSA is $5,000, up to the maximum family amount for which you qualify.
The minimum amount per pay-period you may contribute to each account is $2.00. The total amount you decide to elect for the plan year is called your Annual Goal; you may not change your Annual Goal once Benefits Open Enrollment ends, unless you have had a qualifying life event.
It is important to only contribute as much as you can reasonably expect to spend on out-of-pocket health care or dependent care expenses (based on the FSA you select) for the coming year. View the Health Care FSA with Carryover FAQs for more information on how to avoid forfeiture for Health Care FSAs.
- What are the differences between the Health Care and Dependent Care FSAs?
There are three major differences between the FSAs. First, each account has different eligible expenses; review them by selecting the following links: General Purpose Health Care FSA , Limited Purpose Health Care FSA, or Dependent Care FSA.
Second, is when account funds are available for you to use:
- Health Care FSA - the entire Annual Goal is available at any time throughout the plan year, regardless of the amount that you have put into the account. That means when the plan year begins on the first of the year, you have access to your full Annual Goal. This is true for both the General Purpose and the Limited Purpose Health Care FSA.
- Dependent Care FSA - you will only be reimbursed up to the amount currently in your account, regardless of the Annual Goal you have elected. For example, if you are submitting a reimbursement claim for $400.00 and only have $200.00 in the account, you will initially be reimbursed for $200.00 and reimbursed for the rest once the funds are deducted from your pay and deposited in your account.
Third, with the Health Care FSAs, you will have access to a Health Care FSA Card. The Card works like a debit card that gives you full access to your account funds. The Health Care FSA Card is not available for the Dependent Care FSA.
- What is an FSA Grace Period?
Internal Revenue Service Notice 2005-42 permits a plan to establish a Grace Period of two months and 15 days following the end of each plan year during which unused contributions in your 2021 plan year Dependent Care FSA may be reimbursed for qualifying expenses incurred during the grace period. The State of Michigan has established this Grace Period for the Dependent Care FSA.
Since the State of Michigan’s FSA plan years end on December 31st, you may incur qualified expenses through March 15th of the following year to use any remaining funds from your Dependent Care FSA, as long as your employment hasn’t ended.
The Grace Period should not be confused with the run-out period. The run-out period allows you additional time to submit requested substantiating documentation for your prior plan year FSA. The State of Michigan’s 2021 plan year run-out period ends on March 31st, meaning you will have until March 31st to submit requested receipts and documentation for the prior plan year.
Both types of Health Care FSAs feature Carryover. View the Health Care FSA with Carryover FAQs for more information.
- Should I include the Grace Period when calculating my future Annual Goal for my Dependent Care FSAs?
No. You should use only the 12-month calendar year for calculating expenses for your 2021 plan year Dependent Care FSA. The Internal Revenue Services (IRS) Grace Period is intended to provide a safety net for you only if you have not incurred all of your anticipated expenses during the previous plan year.
- What is the WageWorks© Health Care Card?
The WageWorks© Health Care FSA Card allows you to pay for eligible purchases directly from your Health Care FSA. The Card works like a debit card, except the funds are deducted from your Health Care FSA, as governed by IRS regulations. The Card can be used at medical, dental, vision appointments, retail establishments, and pharmacies depending on which Health Care FSA you are enrolled in.
WageWorks© issues a new Health Care FSA Card for those who are newly enrolled, and when existing cards expire. The Health Care FSA Card will expire every three years. You should continue to use your current Health Care FSA Card until you are issued a replacement, which will happen automatically. If you currently have a Health Care FSA Card, continue to use that same Card as it is valid for a period of three years. Card expiration date can be found on the front of the card.
Employees newly enrolling in a Health Care FSA or those with WageWorks Health Care Cards that are expiring will receive a new HealthEquity Card due to HealthEquity recently acquiring WageWorks. New Health Care FSA enrollees will receive a HealthEquity Health Care Card prior to the beginning of the 2021 plan year.
To activate the Card, you must use the last four digits of your Employee ID#. Cards for your dependents are activated by using the last four digits of their Social Security Number (SSN), rather than the employee's SSN. You will not be charged a fee to obtain, activate, or use the Card.
The Health Care FSA Card cannot be used for Dependent Care FSA expenses. For additional tips and information on using the Card, go to www.wageworks.com/card.
- What payment options are available for FSAs?
Health Care FSAs:
- Swipe your WageWorks© Health Care Card at the point of sale.
- Log in to your account at www.wageworks.com to submit an online Pay Me Back Claim, or, use the Pay My Provider option.
- Download the WageWorks© EZ Receipts app and take a photo of your itemized receipt and submit your claim.
- Mail or fax a claim form to WageWorks©.
Dependent Care FSAs:
- Do I need to save or submit documentation for my FSA expenses?
Yes, per IRS regulations, you must save your itemized documentation for tax purposes. This includes receipts, bills, and any other documentation you may receive detailing your expenses when using the Health Care FSA Card. Otherwise, WageWorks© may request that you provide documentation such as a detailed receipt to validate a claim at any time throughout the plan year. The last day to substantiate reimbursement requests through WageWorks for the 2021 plan year is March 31st, 2022.
Note: Health Care FSA participants using the Health Care Card must submit requested substantiation receipts within 90 days of the original transaction date, to WageWorks©, or the Card privileges will be suspended.
- How will I know if documentation is needed for my claims?
WageWorks© will notify you through your preferred communication method of online account, mail, text message, or email. You may select your preferred communication method through your WageWorks© account. You are strongly encouraged to log into your WageWorks© account on a regular basis to monitor requests.
It is your responsibility to ensure all outstanding claims have been substantiated no later than March 31, 2022 for the 2021 plan year.
- What happens if I do not send itemized documentation to WageWorks©?
If using the WageWorks© Health Care Card, the Card will be suspended if you do not submit documentation to WageWorks© within 90 days of the original transaction date. If your Card is suspended, it will be reactivated within 24 - 48 hours after receipt or repayment has been processed and approved for all unverified Card transactions.
If using a Pay Me Back claim, WageWorks© will recoup the unsubstantiated amounts through your next Pay Me Back claim submission.
If any amount remains unsubstantiated after the 2021 plan year run-out period (March 31st) and is not recouped by WageWorks©, you will be required to repay the amount as defined by Michigan Civil Service Commission Regulation 5.19. This means the unsubstantiated amount will be recouped from your pay or you will receive a corrected W-2.
- Do I need to submit anything else with a claim?
Yes, an itemized bill, receipt, or Explanation of Benefits (EOB) from the provider must be included, showing the following:
- Patient name
- Provider name
- Type of service
- Date(s) services were provided, and
- Amount you were charged, or your cost after insurance settlement
Account statements must include all of the above bulleted items, for each expense, if they are to be used instead of a receipt. Over-the-counter (OTC) drugs and medicines can be paid for or reimbursed through a Health Care FSA without a doctor’s prescription.. Certain eligible expenses also require a Letter of Medical Necessity, signed by your doctor, in order to receive reimbursement.
- How can I view important account information, such as required documentation for a claim, whether my claim has been processed, my account balance, etc.?
This information is available by registering on the WageWorks© website at www.wageworks.com. You are strongly encouraged to access your WageWorks© account on a regular basis to assist you in managing your FSA(s) and monitor substantiation requests. If you are unable to obtain the information you are looking for, or have any account issues, contact WageWorks© Customer Service Center at 877-924-3967, Monday through Friday, 8:00 a.m. - 8:00 p.m.
- How do I report a lost Health Care Card or request additional Cards?
Additional WageWorks© Health Care Cards for yourself, spouse, and qualified individuals (over age 18) can be requested by accessing your WageWorks© account (www.wageworks.com), and selecting Card Center at the top of the page. There is no charge to you for additional Cards.
To report a lost or stolen Card, contact WageWorks© Customer Service Center at 877-924-3967, Monday through Friday, 8:00 a.m. - 8:00 p.m. Additional Card requests are also accepted by phone. Use the last four digits of your employee ID#, rather than the last four-digits of your SSN when calling.
- What happens to my FSA if I am seasonal, departed, retired, laid off, or on a leave of absence?
Health Care FSA:
- Seasonal employees – Seasonal employees who are enrolled in a Health Care FSA and are laid off will have their account suspended and Cards inactivated until returning to work. If returning to work in a different plan year, contact the Employee Benefits Division at 800-505-5011.
- Departures, Retirees, and Layoffs– Health Care FSAs for these employees will end and Cards will be inactivated the last day of the pay-period worked. Individuals wishing to achieve their Annual Goal and continue their Health Care FSA by a pre-tax deduction from their remaining pay warrants should complete the Health Care FSA Continuation of Coverage Form (CS- 1814). Employees may also choose to pay for the remaining contributions by personal check after tax. Note: If you have paid your entire Annual Goal before leaving state service, your FSA is extended through the end of the plan year, plus any applicable Carryover period. Health Care FSA Cards are disabled once you are no longer an active employee. To receive reimbursement for your remaining funds you must pay out of pocket and submit for reimbursement through WageWorks.
- Leave of Absence - Employees with a Health Care FSA who are placed on a leave of absence or experience "lost time" will have full use of this FSA and the Health Care Card. Employees will be required to make-up any missed contributions upon returning to work.
Dependent Care FSA:
- Unpaid Leave of Absence or Workers Compensation: Your eligibility for the Dependent Care FSA ends on your last day of work. Expenses incurred while you are not actively at work are ineligible for reimbursement. If you return to work during the same calendar year, dependent care expenses incurred are again eligible for reimbursement. Contributions will restart at the same biweekly contribution in place before you left, unless you request a change due to a qualifying life event.
- Paid Leaves: Contributions continue during a paid leave of absence, but expenses incurred while you are not actively at work are ineligible for reimbursement.
- Seasonal Employees: Seasonal employees who are enrolled in a Dependent Care FSA and are laid off will have their account suspended. If returning to work in a different plan year, contact the Employee Benefits Division at 800-505-5011.
- Departures, Retirees, & Layoffs: Your eligibility for the Dependent Care FSA ends on your last day of work. Expenses incurred while you are not actively at work are ineligible for reimbursement.
- What happens if I am rehired/recalled?
Employees rehired or recalled within 30 days of their departure and within the same plan year who had an FSA must maintain their original Annual Goal, unless there is a qualifying life event. There will be no lapse in coverage, contributions will be recalculated, and your GPHC or LPHC FSA Carryover balance will not be affected.
Employees rehired or recalled after 30 days from their departure and within the same plan year who had an FSA will not have their FSA restarted and cannot re-enroll until the next plan year, except for seasonal employees.
Employees rehired or recalled who were not previously enrolled in current plan year FSAs may contact the MI HR Service Center within 31 days of rehire or recall date to enroll.
- Who do I contact regarding questions about claims and substantiating documentation that I have or may still need to submit?
The WageWorks© Customer Service Center should always be your first point of contact. They can be reached at 877-924-3967, Monday through Friday, 8:00 a.m. - 8:00 p.m. Their customer service staff has detailed information regarding your account and can confirm what documentation has been received, processed, and/or identify any outstanding issues. You can also log into your WageWorks© account (www.wageworks.com) to confirm whether you have any claims that require substantiating documentation.
- What happens if I do not seek reimbursement or submit requested substantiation (receipts) for the prior plan year by the end of the run-out period?
In accordance with IRS regulations, if you do not seek reimbursement for your claim(s) with WageWorks© for the 2021 plan year by the March 31st run-out period deadline for the prior plan year's account, funds will be forfeited from your Dependent Care FSA and any funds that exceeds the allowed $550 carryover amount for either type of Health Care FSA remaining in your account for that plan year will be forfeited. Also, any claims that WageWorks© requests substantiating documentation for that are left unsubstantiated after March 31st will be recouped by the State of Michigan on a post-tax basis. These funds will be taken via payroll deduction on a bi-weekly basis until the full amount of the unsubstantiated claims are recouped.
Exception: Under the "Heroes Earnings Assistance and Relief Tax Act of 2008" (H.R. 6081), employees called to active military duty for a period of at least six months would be allowed to receive a taxable distribution of their Health Care FSA funds to avoid forfeiture. This law is considered an optional enhancement to the Health Care FSA plans. The State of Michigan has adopted this enhancement to the plan.
- What happens if I have money left in my Dependent Care FSA during the Grace Period?
You may incur qualified expenses through the end of the Dependent Care FSA Grace Period ending March 15, 2022. As required by the IRS, any funds remaining in your account after all claims submitted by the March 31, 2022 submission deadline (run-out period) are forfeited.
- How Can I Resolve a Card Transaction That Requires a Receipt or Repayment?
IRS regulations require that card transactions be verified (to show your plan benefits were used to pay for eligible expenses).
WageWorks© does not offer generic Card Use Verifications (CUV). All CUVs are prepopulated with the card transactions being requested. If you misplace your CUV form, you may request a duplicate from WageWorks© via phone or access it through the claim in your online WageWorks© account. CUVs expedite processing but are not required to resolve card transactions. Please follow the instructions below to resolve unverified card transactions.
Options to resolve a card transaction:
- Submit a copy of the detailed receipt for the actual card transaction that contains the service date, service description, patient name, provider name, and your cost.
- Submit a copy of any number of substitute receipt(s) for any eligible products and services that you did not and will not pay for using funds in your health care account.
- The receipt(s) must include the service date, service description, patient name, provider name, and your cost (amount of patient financial responsibility).
- The substitute receipt(s) must be for an eligible expense incurred by an eligible dependent during the same coverage period as the card transaction to be verified.
- Send a check to repay your account for the above amount if you no longer have the detailed receipt or if you accidentally used your card to pay for ineligible expenses.
- The amount that is repaid will be available to pay for other eligible expenses you incur during your plan year. Any amount of card transactions that remains unverified 90 days after the card transaction date will be automatically deducted from any future Pay Me Back claim payments.
- Your check should be made out to: WageWorks
- Please mail your check to: Claims Administrator-FBWW, PO Box 14326, Lexington, KY 40512
- Please submit the following information with your payment to ensure desired processing: First and Last Name, Employer: State of Michigan, Last 4 numbers of your Employee ID, Residential Zip Code, and Birth Date (month/year).
- Please note which transactions you are repaying to ensure the repayment is processed correctly.
Reminder: Failure to submit appropriate proof or repayment for your card transactions will result in suspension/loss of your card privileges, possible tax penalties, and recoupment. If these unsubstantiated claims remain on your account after the Plan Year Documentation Deadline (Run-Out Period), the State of Michigan will begin the collection as defined within the Michigan Civil Service Commission Regulation 5.16, Correcting Compensation & Benefit Errors.
- What happens if I have money left in my 2019 FSA during the Grace Period?
You are able to use remaining funds in your 2019 plan year FSAs to pay for expenses incurred during the January 1, 2019 to March 15, 2020 Grace Period. (During the 2020 plan year, only the Dependent Care FSA will include a Grace Period with the Health Care FSA moving to a Carryover option. View the Health Care FSA with Carryover FAQs for more information.)
All standard payment options are available to eligible employees during the 2019 plan year Grace Period, including the WageWorks© Health Care Card, claim submissions using the Pay Me Back Claim Form, and the www.wageworks.com online claims reimbursement methods, or through the WageWorks© EZ Receipts smartphone app. Reimbursement Requests (claims) and requested substantiating documentation must be submitted by May 31, 2020. Your eligible claim(s) will be paid up to the balance remaining in your 2020 account.
Funds are withdrawn during the Grace Period using the “First-In, First-Out” method, where your 2019 contribution will be exhausted before drawing from 2020 plan year funds (if you enroll for 2020). If you exhaust your 2019 plan year FSA contribution funds before the end of the Grace Period, money will begin to be drawn from your 2020 FSA(s) to pay for expenses. If you do not enroll for the 2020 plan year, you will simply have the Grace Period to exhaust the remaining funds in your 2019 contribution.
- Printable Version of FSA FAQs