Overpayments may occur on benefit accounts like flexible spending accounts (FSAs), dependent care FSAs (DC-FSAs), limited purpose FSAs (LP-FSAs), and health reimbursement arrangements (HRAs), because purchases made with your card are reviewed for eligibility after the fact. If you’ve received an overpayment notice, this article explains what it means and how to resolve it.
What's an overpayment
When you use your benefit card, eligible purchases are drawn directly from your account. Sometimes a transaction is reviewed and found to be fully or partially ineligible under IRS rules or your plan’s provisions. The amount that wasn’t eligible is called an overpayment.
Common reasons an overpayment can occur:
No receipt or documentation was submitted within the required timeframe.
Documentation showed the expense wasn’t eligible based on IRS requirements or your plan’s provisions.
Only part of the purchase was eligible.
The transaction occurred when your account wasn’t eligible for use.
Your overpayment notice includes the transaction date, merchant name, amount owed, and the reason the expense was deemed ineligible.
How to repay an overpayment
Repayment methods can vary by plan. If your overpayment notice lists different instructions than what you see here, follow your notice.
Mail a check
Make your check payable to Trustee Operations. On the memo line, write:
“Account Repayment”
Your full name
Benefit name
Mail the check to:
Trustee Operations
25 Air Park Drive, Suite 100
London, KY 40744
Once your check is received, your overpayment will be cleared within 3 business days.
If a provider or merchant refunds your purchase
A refund from the provider or merchant appears as a credit in your benefit account, but it doesn’t clear your overpayment on its own. If you’ve received a refund for a purchase covered by your overpayment notice, contact Support so we can review it.
You’ll also still need to settle the original purchase with the provider or merchant another way.
What happens if you don’t repay
Your plan may set its own deadline for repaying an overpayment. Check with your benefits administrator for details specific to your plan or refer to your plan documents.
If an overpayment isn’t repaid, the amount may be treated as taxable income. Your employer handles that reporting, and both the timing and treatment depend on your plan type and your employer’s process. Check your plan details or contact your benefits administrator with questions about how this applies to your plan.
If you repay the overpayment, the amount returns to your benefit account and remains available for eligible expenses incurred during the current plan year and submitted before your plan’s deadline.