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Processing FSA and LPFSA Qualifying Events in HRS

Overview

This business process outlines the procedure for making a change to an employee's FSA election during a qualifying event.

Process Considerations:

  • Employees can change their Flexible Spending Account (FSA) annual election only under limited circumstances as provided by established IRS guidelines.
  • The Change of Election form is to be used by employees to enroll in (if not already enrolled), or make changes to their Medical, Dependent Care, or Limited Purpose FSA annual election within 30 days of a qualifying life event. It is the institution’s responsibility to review and approve/deny the request based on IRS guidelines, using the  ETF Qualifying Event Matrix.
  • Applications must be submitted within 30 days of the employee's qualifying event (unless due to birth of child - 60 days).
  • If the employee is enrolling in the Limited Purpose FSA (LPFSA), verify in HRS that the employee is enrolled in the HDHP & HSA plans first. If the employee is not enrolled in these plans, they are not eligible for the LPFSA. Check with the employee to see if they meant to enroll in the Medical FSA plan instead.

FSA Overrides:

  • Employee contributions will be deducted in equal amounts from each paycheck, pre-tax, throughout the Plan Year.
  • Employees must follow the 26 or 20 pay schedules
  • Only C-basis (9 month) employees will have overrides on their accounts
  • UWSS Benefits Team will be auditing for overrides that are placed on non C-basis employee Spending Accounts and will remove them
  • Employees may NOT have overrides placed on their FSA accounts UNLESS it is their final paycheck prior to retirement/termination. These requests must be sent to UWSS Benefits Core Team for processing.
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Instructions

1. Receive FSA Change in Election form within 30 days of a qualifying event.

2. Review the Qualifying Event Matrix to determine if the qualifying event is valid. Request additional information from employee if you need more information to determine validity.

  •  For example: Employee checks “Change in Employment Status." You can request more information regarding the change—is it increase/decrease in FTE? You can also confirm with the department.
  • If the Qualifying Event is NOT valid: Institution notifies the employee. Process end.
  • If the Qualifying Event is valid, confirm that the change is consistent with the event. (Election change(s) must be consistent with the qualifying life event. Ex: If you get married or have a child, you can enroll in or increase your election, but not decrease. In the case of divorce, you can increase/enroll if you become main caretaker of the child.  If a child no longer qualifies as a dependent, you can decrease your election, but not increase. See matrix for more guidance.)
    • If enrolling, make sure employee is eligible for the plan (Ex: LPFSA, can only enroll in this if they are enrolled in HDHP & HSA). 
    • If changing election, make sure employee is already enrolled in the plan (Ex: employee enrolled in Medical FSA should not have a change indicated for LPFSA plan).
3. Confirm that the "New Annual Election" is an ANNUAL amount, not per pay period amount and does not exceed the annual IRS Contribution Limit.

4. Enter the FSA Enrollment/Change into HRS as soon as it's received to ensure employee will be enrolled in a timely manner.

  • Change is effective the first of the month on or following the qualifying event date, EXCEPT for birth/adoption or loss of coverage (change is effective the day of the qualifying event).
  • Use effective date as the FSA or ADM event.
  • C-basis employees: UWSS Benefits Core Team will update employee override amounts. FSA deductions are taken on summer session and summer service appointments.  
    Enrollment
    5. Based on the request from the employee, please check the appropriate enrollment reason box on the form.

    6. File the form in the employee's benefits file.
     
    Note: Employee(s) cannot change their annual election to an amount that is less than the amount they've already contributed.
    • If an employee requests to decrease their annual election, a request to UWSS Benefits Core Team should be sent via Alemba ticket so FSA claims can be audited to determine the amount the annual election can be decreased. 

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    Keywords:
    FSA, Flex, Flexible Spending Account, ERA, Employee Reimbursement Account, LPFSA, Limited Purpose Savings, Change Election, Qualifying event, Life Event, Change in Status, BN, Benefits BN, Benefits 
    Doc ID:
    48812
    Owned by:
    erinn b. in UW–Shared Services
    Created:
    2015-03-16
    Updated:
    2024-05-14
    Sites:
    UW–Shared Services