Leave of Absence & Leaving the U of M

If you take a leave of absence during the year or leave your job at the University, it will affect how you use your FSA. That’s because participation may end on the first day of your leave of absence or the last day of employment.

Change Due to Leave of Absence

Health Care FSA

  • If you make contributions to the FSA while out on a leave of absence, you may continue to submit expenses for reimbursement.
  • If you do not make contributions while on leave, any expenses incurred while on your leave are not eligible for reimbursement.

Dependent Care FSA

You can use the money remaining in your account for work-related dependent daycare expenses through the end of the year.

Return to Work Before the end of the Calendar Year

If you return to work before the end of the year, payroll deductions will start again with the first full pay period after you return.

To make sure that you get all of your FSA contributions made by the end of the year, the Payroll Department will make this calculation:

  • It looks at your annual election amount and subtracts your year-to-date contributions, and
  • The difference is deducted in equal amounts from your remaining paychecks for the year.
For Example:

Annual Election Amount = $1,300
$1,300 ÷  26 biweekly pay periods = $50 each pay period

Contributions taken before the Leave started on March 15:
7 year-to-date contributions (7 x $50) = $350

Difference between annual election and year-to-date contributions upon return to work on June 15:
$1,300 - $350 = $950
$950 ÷ 13 remaining biweekly pay periods = $73.08 each pay period


Change Due to Termination, Retirement, or Layoff

Health Care FSA

Your FSA participation stops after your last day of employment. This means you will no longer be able to incur expenses and receive reimbursement for those expenses after your last day of employment.

If you still have money in your FSA, and you don’t have enough eligible expenses before termination to use up the balance, you can avoid losing the money if you elect to continue participation through COBRA. Contributions made through COBRA are done so on an after-tax basis. This allows you to continue to submit claims for expenses as long as you make contributions to the plan.

Dependent Care FSA

Contributions to your FSA end with your last paycheck. If you still have a balance, you can continue to submit claims through the end of the year for daycare expenses if you’re looking for work or you have a new job.