[UCRDBR] Flexible Spending Accounts - Denied Claims Due to the 2020 Carryover Delay

[Departmental Benefits Representatives]

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August 24, 2021
To:
Department Benefits Representatives (DBRs)

From:
HR Benefits Office

Re:
Flexible Spending Accounts - Denied Claims Due to the 2020 Carryover Delay

UCOP was advised that certain participant Health FSA claims for 2021 were rejected in error. The claims denials occurred when an individual enrolled in the plan mid-year and submitted claims for services incurred prior to their enrollment, and before the 2020 carryover funds were made available to cover those claims (see example scenario below):

Issue: Joe Smith had a $500 balance at the end of Plan Year (PY) 2020 and declined to enroll in the 2021 Health FSA during Open Enrollment. Under the CAA COVID relief provisions, Joe was allowed to enroll in the 2021 FSAs mid-year, so he decided to enroll in the Health FSA with an effective date of May 1, 2021. WEX completed the 2020 carryover transition in late June and posted the carryover to Joe's existing account with effective date May 1, 2021. Prior to the carryover funds being posted to his account, Joe submitted a $700 claim for services incurred on March 5, 2021. The claim was rejected due to insufficient funds.

Remedy: WEX will apply the carryover balance effective date of January 1, 2021 for all participants who enrolled in the Health FSA in mid-year. This will allow any eligible 2021 claims incurred prior to the date of the mid-year enrollment to be paid out of the carryover funds until they are exhausted. Amounts incurred prior to the mid-year enrollment that exceed the carryover balance will not be reimbursed. Joe may submit his rejected $700 claim for reprocessing. He will receive a $500 reimbursement. $200 of the claim, which was incurred prior to his mid-year enrollment, would not be eligible for reimbursement because it exceeds the carryover balance. WEX will start using Joe's 2021 election amount to pay out claims incurred after May 1, 2021.

WEX has identified many participants who enrolled mid-year 2021 and have carryover balances from 2020; however, not all of have filed claims. Upon WEX's completion of backdating the plan effective date to January 1, 2021, participants will receive an email noting their account has been updated. After receiving the email notification, participants may re-submit any claims denied due to insufficient funds.

Questions regarding denied claims or submitting claims prior to their 2021 enrollment, may be referred to WEX using UC's designated phone line: (844) 561-1338.


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