Chapter 19 – Flexible Spending Accounts

(10/94; Amended 7/99; 7/02; 10/04; 2/07; 6/11)

19.1 General

Eligible faculty and staff may participate in either one or both of the University's Flexible Spending Account Programs for dependent care or health/dental care. From each paycheck received, the University deducts the amount the employee designates on his or her Flexible Benefits Enrollment Agreement. Funds deposited into an employee's spending account are tax exempt up to the current maximum level set by the Internal Revenue Service.

19.2 Covered Expenses

  1. Dependent care. Expenses which will be paid for dependent care must be connected with the custodial care of children who are under the age of 13 years and are claimed as an exemption on the employee's federal income tax return, or other eligible dependents such as a disabled spouse or dependent parent, provided that the care is required so that an eligible employee or spouse can work or attend school on a full-time basis. Expenses must be for the following types of dependent care provided during working hours:
    1. Nursery schools
    2. Licensed day care centers
    3. Private babysitters
    4. Institutions that provide custodial care for dependent adults
    This account cannot be used to pay the employee's spouse, the employee's child who is under the age of 19, or any person whom the employee claims as a dependent on an income tax return.
  2. Health/dental care. Expenses which will be paid for health/dental care or any expenses connected with the health/dental care of the employee and/or any eligible dependent as defined by the Internal Revenue Service (IRS) must be for services or items that the employee will not be reimbursed for from any health/dental insurance program, whether with The University of Iowa, and/or any other employer or individual policy. Expenses that qualify are items such as:
    1. Deductibles and copayments
    2. Dental expenses
    3. Vision expenses
    4. Hearing expenses
    5. Physical examinations
    6. Psychiatric fees
    7. Chiropractic expenses
    8. Smoking cessation programs prescribed by a physician
    9. Alcoholism or drug treatment
    10. Prescription drugs

(See also https://hr.uiowa.edu/fsa.)

19.3 Changes to Flexible Spending Accounts

(Amended 6/11)

Changes to one's spending accounts may be made during the year if there is a significant change in family status. A change in family status includes marriage, divorce, death of a spouse, death of a dependent, and birth or adoption of a child. In addition, an approved leave of absence or the termination or gaining of employment of one's spouse are events which qualify for changes. Requested changes due to one of the above listed events must be communicated to the University Benefits Office within 30 days following the date of the event.

19.4 Reimbursement Requests and Methods

(Amended 7/02; 6/11)

Reimbursement request forms are available to employees who elect flexible spending accounts. Reimbursement claims may be made any time during the year, but no later than the last working day of April of the following year.

Reimbursement is made by direct deposit into one's checking or savings account.

19.5 Reimbursement Receipts

(Amended 6/11)
  1. Dependent/child care. Employees must attach to the reimbursement request form receipts to justify expenses. For dependent care expenses, receipt can be a formal receipt or a handwritten document stating that the provider is in receipt of the employee's payment. Canceled checks cannot be accepted as a receipt. All receipts will be retained by the University Benefits Office and will not be returned.
  2. Health care. All medical/dental expenses must be processed through one's insurance carrier, normally Blue Cross and Blue Shield of Iowa, before consideration can be given to one's claim under the flexible spending account reimbursement procedure. The only exception to this will be items that are known to not be covered by a particular health insurance program.

19.6 Reimbursement Accounts

The University Benefits Office maintains records of participants' payroll reductions and requests for reimbursement. If one's reimbursement request exceeds the amount of money in one's account, the University Benefits Office maintains that request and continues to pay off of that request in the future. Claims do not have to be resubmitted.

19.7 IRS Reporting

The University Benefits Office retains all receipts. The University of Iowa reports to the Internal Revenue Service the amount of money the employee sets aside for dependent care. Program users must list on their year-end tax return the name, address, social security or tax identification number, and amounts paid to child care providers.

(See also https://hr.uiowa.edu/fsa/irs-reporting.)

19.8 Restrictions

(Amended 10/04; 6/11)

 Expenses reimbursed in a spending account must be incurred in the year of the spending account. Expenses incurred during one calendar year but paid the following calendar year will not be eligible for reimbursement. Employees have until the last working day of April of the following calendar year to be reimbursed for such expenses, but the expenses must have occurred during the prior calendar year. Any money remaining in a particular calendar year account on December 31 for which the employee cannot produce expenses will be forfeited to the University.

If an employee terminates employment during the calendar year and he or she is participating in this program, all dependent care funds remaining must be spent by December 31 and claimed by the last working day of April of the following year. If the employee who terminated was participating in the health care spending program, all funds remaining for claims incurred during employment must be claimed by the last working day of April of the following year. Any funds not spent by that date will be forfeited to the University.