Administrative Policies and Procedures Manual - Policy 3650: Flexible Spending Accounts Program

Date Originally Issued: 01-01-1990
Revised: 01-01-1993, 08-23-1999, 05-22-2006, 01-01-2012, 07-06-2020

Authorized by RPM 6.3 ("Privileges and Benefits")
Process Owner:  Vice President for Human Resources

1. General

The University has a Flexible Spending Accounts (FSA) Program which allows eligible employees to set aside a portion of their annual salary to pay qualified unreimbursed medical expenses and qualified dependent care expenses incurred during the year before taxes are calculated. Described herein are policies pertaining to the FSA Program. The FSA Plans booklet explains the Program in more detail and is available from the Benefits Office of the University Division of Human Resources. The Benefits Office is located at the UNM Human Resources Service Center.  

2. Authority

The FSA Program is a benefit authorized by the Internal Revenue Code and regulated by the Internal Revenue Service (IRS). IRS regulations define which expenses qualify for reimbursement under this plan. Nothing in this policy shall impose or limit requirements which may be otherwise imposed by law. Exceptions to the regulations governing this Program cannot be granted by the University. Tax law changes may affect this Program.

3. Flexible Spending Accounts

Employees can participate in the FSA Program by setting aside part of their pay on a before-tax basis to:

• Set up a Health Care FSA to pay certain qualified medical, dental, prescription, vision, and hearing care expenses for eligible employees or their eligible dependents that are not covered by insurance plans. IRS identifies qualifying medical expenses in Publication 502, which is available from any IRS office. Examples of qualified medical expenses are listed in the FSA Plans booklet.
  
• Set up a Dependent Care FSA to reimburse the employee for dependent care at a licensed facility, services from unrelated individuals, care at dependent care centers, and other qualified dependent care expenses. 
  

The money an employee sets aside for the FSA Program will be subtracted from his or her gross pay before income and Social Security taxes are calculated, thus reducing taxable income. Employees choose how much to contribute. The annual contribution amount chosen is equally divided into pay-period deductions. To be reimbursed for eligible expenses, the employee must submit claims to the University's FSA administrator.

Since individual circumstances vary, participation in an FSA Program does not always mean tax savings. Employees must decide for themselves if the Program is advantageous to them. The Employee Benefits Office can assist an employee in evaluating the benefit of participation.

3.1. Plan Year

The plan year for the FSA Program begins on July 1 and ends on June 30. Continued participation requires active enrollment each year.

4. Eligibility

The following types of employees are eligible to participate:

• Regular staff employees who are full-time or part-time and have an appointment percent of 50% or greater
• Term or contract staff employees who are full-time or part-time, have an appointment percent of 50% or greater, and have a minimum three (3) month term appointment or contract
• Temporary staff employees who have an appointment percent of 75% or greater and have a minimum three (3) month appointment are eligible for certain Benefit Plans
• Faculty members who have a minimum three (3) month contract and have an appointment percent of 50% or greater
• Adjunct faculty who have a minimum three (3) month contract and have an appointment percent of 75% or greater are eligible for certain Benefit Plans
• Post-Doctoral fellows who have a minimum of thee (3) month contract and have an appointment percent of 50% or greater are eligible for certain Benefit Plans

The following types of employees are not eligible to participate:

• Part-Time employees with an appointment percent of less than 50%
• Non-Credit teachers

• On-Call employees

5. Enrollment

Employees may enroll and re-enroll in the Program during the open enrollment period. New eligible employees may enroll in the Program no later than sixty (60) days following the date of employment.

6. Related Links

Forms can be found on the HR website forms page.