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© by the 2020 plan year 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 $500 carryover amount for a 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.