• You are here:
  • Home »
  • HSA »

VIDEO: Captain Contributor Explains The Uniform Coverage Rule

FSA Basics

It doesn’t take superpowers to know the cost of healthcare is expensive. That’s why many employers offer tax-advantaged healthcare benefits, like a Flexible Spending Account, or FSA, to help out their employees.

During open enrollment, you decide how much your annual election will be, up to the annual limit set by the IRS. When the plan year begins, the money is deducted from your paycheck each pay period in equal amounts throughout the year.

You Don’t Have to Wait for Your Money

You probably already know that by using an FSA you can get significant tax savings, but did you know that with a health or limited purpose FSA, you do not have to wait for that money to build up before it’s available? It’s a special provision called the uniform coverage rule. Basically, it means that you can access the full amount of your annual election on the first day of the plan year.

For example, during enrollment season you choose to elect $2,000 for your FSA. Then, on January 1 (or the first date of your plan year), you had to go to the emergency room and were charged $2,000. You can use the full amount of your FSA election, even though only a fraction of that amount has been contributed so far. Each pay period, you will still have the same amount deducted from your paycheck – though the available balance is now $0. It’s almost like an interest-free loan.

So don’t worry about waiting for your FSA to build up in order to get the healthcare you need  – it’s there whenever you need it.