As the plan year for your Flexible Spending Account (FSA) comes to an end, there are a few things you need to know to make sure you are maximizing your FSA account benefits.
Calendar-year FSA plans end on 12/31. Your plan may differ, but at least a month or two before it ends, you should review the following four factors.
As with any money account, you should have a general idea about how much you have left to spend. This is especially true near the end of an FSA plan year. If you don’t use the available balance, you risk losing some (or all) of that money for good.
Your available balance and other account information is available through the online portal and the mobile app.
Unspent Funds: Lose, Carryover, or Grace?
Do you know how your employer’s FSA plan treats unspent funds at the end of the plan year? Your plan will have one of three possible options:
- Use It or Lose It: This is very straightforward. If you don’t incur expenses against all of your FSA money, you lose the unspent balance. Once the plan year ends, you may have more time to file claims on what you spent during the plan year (see the next section on Run-Out Period). But, you cannot make new purchases using any leftover funds.
- Carryover: Many employers offer FSA Carryover. Under this option, you can roll over up to $550 in unspent balance to the next plan year (the exact amount may vary depending on your employer). This money can be spent at any point during the succeeding plan year.
- Grace Period: This option gives you up to 2.5 months after the plan year ends to spend unused funds. Eligible expenses you incur during the Grace Period are charged against your leftover funds until either the money has been used up or the Grace Period has ended (the exact time frame may vary depending on your employer).
Your Summary Plan Description (SPD) should have all the details on which of these three options apply to your FSA plan. If you have questions, contact your HR department or employee benefits administrator.
If you incurred a qualified healthcare expense during the plan year that you haven’t gotten around to filing a claim for, you may have extra time to get that done. Runout typically lasts 90 days after the last day of the plan year, although this varies by employer.
As explained by Captain Contributor, the benefits superhero:
“Run out is a predetermined period during which you can file claims for the previous year. In other words, if your run out period lasts until March 31, you would have until that time to file claims for expenses that happened before December 31. Run out periods provide a little extra time to get reimbursed. Keep in mimd, the runout period varies by plan.”
Eligible Expenses and Receipts
Do you know which expenses are eligible for reimbursement and which are not? Commonly claimed expenses include co-pays for doctor visits and lab tests, deductibles, eye exams and prescription eyewear, dental exams and treatments, prescription medications, and a variety of over-the-counter (OTC) products and medicines.
But there are so many more things you can use your pre-tax FSA dollars on. Here’s a list of qualified expenses.
IMPORTANT: Keep your receipts, even if you use your benefits debit card, because we may need them to substantiate (verify) your purchase. Your receipt should include the following information:
- Date and time of purchase
- What item or service was paid for
- Who the service was for (you or one of your dependents)
- Amount paid for the service/item
If it does not, ask your medical provider for a detailed services receipt to make sure your purchase can be verified.
As you close out the year, keep these four important FSA-related things in mind so you can get the most out of your benefit dollars.