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VIDEO: Captain Contributor Explains The Uniform Coverage Rule

Captain Contributor Explains the Uniform Coverage Rule

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

During open enrollment, you decide how much your annual FSA 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.

The Uniform Coverage Rule

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.

How It Works

Here is an 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 of money deducted from your paycheck – though the available balance is now $0. It’s almost like an interest-free loan. Plus, if you leave your job or are terminated sometime during the year, your employer cannot require you to pay back the money you have already spent.

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.