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BN - UW FSA/LPFSA Qualifying Event Process
This business process outlines the procedure for making a change to an employee's FSA election during a qualifying event.
- Employees can change their FSA elections 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 elections 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 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 they have not enrolled in HDHP & HSA, please reach out to employee and request proof of other HDHP coverage. Proof of other HDHP coverage needs to be sent to UWSC Benefits Team via a Cherwell ticket. If the employee is not enrolled in these plans and/or is not covered by their spouse's HDHP/HSA, then they are not eligible for the LPFSA. Check with the employee to see if they meant to enroll in the Medical FSA plan instead.
- P&T=Parking and Transit
- Employee contributions will be deducted in equal amounts from each paycheck, pre-tax, throughout the Plan Year.
- Employees must follow the 26, 12, 9-pay schedules
- Only 9-pay employees will have overrides on their accounts
- UWSC Benefits Team will be querying for overrides that are placed on 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
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).
4. Enter the FSA Enrollment/Change into HRS by end of day Tuesday for inclusion in the Wednesday file that the Service Center sends to the FSA/HSA vendor 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.
- 9-mo employees: make sure to put on an override and divide the annual election over the remaining pay periods in calendar year. Make sure to subtract any deductions already taken. This assumes they are returning in the Fall. FSA deductions are not taken on summer session or summer service appointments. Examples:
- Employee’s FSA coverage begins 4/1/16 and elects $500 annual contribution. You will need to override and divide the $500 over 5 months (April, May, September, October, November deductions).
- Employee's annual election was $500. Effective 4/1/16 the employee changes the annual amount to $650, but has already contributed $200. Divide the remainder, $450, over 5 months (April, May, September, October, November deductions) and enter the override into HRS.
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.
- If an employee decreases their annual election to be equal to what they've already contributed, they will be allowed to incur expenses up to the new, reduced annual election amount through the end of the plan year.
ADDITIONAL RESOURCESRelated KBs:
- BN - Flex Spending Account/Limited Purpose Flex Spending Account New Hire Enrollment Process
- BN - Review Benefit Enrollments
- Flexible Spending Account (FSA) and Limited Purpose FSA (LPFSA) Policies
- Change of Election Form
- Enrollment Deadline Worksheet
- Payroll Calendar
- ETF Qualifying Event Matrix