Most Popular Questions
What happens if I go on a period of leave without pay (LWOP) and incur an eligible expense?
If you go on a period of Leave Without Pay (LWOP) or other non-pay status during the benefit period (plan year), your agency will not withhold your allotment (FSA contribution) during that time.
If you go into a period of LWOP and have not pre-paid your allotment, your FSA account will be frozen. You will not be eligible for reimbursement of any health care expenses incurred during the LWOP period until you return to pay status and your allotments are successfully restarted.
However, if you have a Dependent Care FSA, dependent care expenses you incur during your leave that meet IRS guidelines may be for reimbursement. For example, if you incur the expenses in order to allow you and your spouse to work, or for your spouse to attend school full-time, you may be reimbursed up to your account balance. When you return to pay status, we will recalculate your allotments based on the number of pay dates remaining in the benefit period.
During your period of LWOP, you can continue coverage that reflects your current election so that allowable expenses you incur during that time will be eligible for reimbursement. This can occur in one of two ways:
- Prepay your election by accelerating your allotments prior to your period of LWOP. Allowable health care expenses incurred during your leave will be eligible for reimbursement. If you have a DCFSA, dependent care expenses you incur during your leave will not be eligible for reimbursement unless they meet IRS guidelines for eligible expenses. To meet these criteria, you must incur the expenses as a result of you and your spouse, if married, needing to work, looking for work, or attending school full-time during the leave. Eligible expenses may be reimbursed up to your account balance.
- Freeze your account. You will not be eligible for reimbursement of any health care expenses incurred during that period until you return to pay status and your allotments are successfully restarted. You have until midnight Eastern Time on April 30 following the end of the benefit period to submit claims for eligible health care expenses incurred prior to your period of LWOP. If you return to pay status during the same benefit period your LWOP began, we will recalculate your allotments based on the number of pay periods remaining in the benefit period.
You will forfeit any funds remaining in your account and will not be eligible for carryover if your account is not fully funded or if it remains frozen during the rest of the benefit period.
Example 1: Let's say you elected $1,300 for the benefit period to be deducted over 26 pay periods, resulting in a deduction of $50 per pay period. Then, you go on LWOP after eight pay periods ($400 already deducted). That leaves $900 of the $1,300 to be deducted from your pay for the rest of the year. You then return to pay status with nine pay dates remaining in the year. We would recalculate your allotments by spreading the remaining $900 over the remaining nine pay dates. Your "new" deduction would be $100 per pay period so that your account is funded in full by the last day of the year.
If your period of LWOP is related to a QLE, you have the additional option of canceling your election for the remainder of the year and reducing your coverage to the amount deposited as of the start of your leave. Expenses you incur during your leave will not be eligible for reimbursement under any of your FSAs.
Example 2: Mike goes on LWOP effective October 1. He returns to his position the following January 15. Mike can file claims for Health Care FSA expenses incurred up to his October 1 leave date, but any expenses incurred from October through his January return date are ineligible for reimbursement, unless he prepaid his allotments.Please note that LWOP is not a QLE, unless activated to military service.