I don’t know about you, but I get plenty of exercise – by jumping to conclusions, pushing my luck, and dodging deadlines! HA!
All kidding aside, if you have a Flexible Spending Account (FSA), deadlines are no laughing matter. Unspent funds at the end of a plan year expire at a certain point, so it’s a good idea to check when your time is going to run out for for spending any remaining balance.
For most employees, December 31 is the end of the benefits plan year. For those who participate in an FSA, that’s also the first deadline for spending current-year FSA money. But you may have spend-down options that give you more time to spend leftover funds before you lose them.
If your employer offers a grace period on an FSA, you have extra time after the plan year ends to spend your leftover funds on eligible FSA expenses.
The length of the grace period is set by your employer. Under IRS regulations, the longest a grace period can be is two and a half months, but some employers choose a shorter grace period, such as 30 or 60 days. Check with your HR department or benefits administrator to confirm the deadline for your grace period.
(For more ways to spend down a leftover account balance, check out these 9 surprising FSA-eligible expenses.)
Instead of a grace period, your employer may offer FSA Carryover. If so, you have until the end of the next plan year to spend at least a certain amount of leftover funds.
Carryover rules let you add any leftover balance from one plan year to your FSA account balance for the following year, and you have the full year to use it.
The IRS sets a maximum amount that you can carry over (for 2024, the maximum is $640), but your employer can choose a lower maximum. Confirm your maximum Carryover amount with your HR department or benefits administrator.
Don’t push your luck with your claims! As with all your healthcare expenses, you should always keep your receipts. You may need them to file a claim, prove that a debit card transaction involved an FSA-eligible expense, or for tax purposes.
The Adventures of Captain Contributor is an award-winning employee benefits education program. Since 2017, the Captain and his sidekick, Betty the Benefactress, have helped countless people better understand their employer-sponsored benefits, including FSAs, HRAs, DCAP, HSAs, LSAs, COBRA, Commuter accounts, debit cards, mobile apps, and more! Follow Captain Contributor on Facebook, Twitter, and Instagram.