3 FSA misconceptions to avoid during FSA Awareness Month
Enrolling in an FSA will require research to figure out if it is the best option for your financial bottom line, but like all things on the internet, even long-debunked ideas can persist. Luckily, we've identified the most common FSA myths that you should disregard in your search for the ideal health plan:
- "I will lose any money I don't spend by the end of the year."
While it is true that all flexible spending accounts adhere to the "use-it-or-lost-it" rule that requires all unspent funds to be forfeited to your employer at the end of each plan year, a number of regulations have made this requirement much easier to work around. Employers now have the option to choose one (or neither) of either a $500 rollover or 2.5 month grace period.
The $500 rollover allows FSA users to move up to $500 into the next plan year's allocation, which won't count against the plan year contribution limit. The 2.5 month grace period gives FSA users two and a half months to spend down the remainder of their FSA funds and submit claims. In fact, we started our company to help people avoid forfeiting funds by creating a one-stop-shop for over 4,000 eligible products you can purchase with your FSA funds. So, with a little advanced planning and careful spending, there's a good chance you won't have to waste a cent of your FSA funds each year.
- "The FSA claims process is a hassle"
With the introduction of FSA debit cards, account holders have the ability to pay for qualifying products and services at the point of sale. In the past, FSA users were forced to pay with a different payment method and file a paper claim with their benefits administrator to be reimbursed for their eligible purchase. While it's still important for FSA users to save receipts and invoices for tax purposes in the event documentation is required by the benefits administrator, FSA cards make it easier for account holders to get what they need without tying up their cash waiting for reimbursement. We make sure to accept FSA cards as a method of payment on our site, and most items on our site auto-substantiate, so you can skip the receipt submission process too!
- "I have to pay in before getting my full FSA allocation"
Before each plan year during Open Enrollment, FSA users choose how much money they would like to set aside for the year, and this is taken out, pre-tax, from your paycheck through regular payroll deductions. While that may sound like your FSA funds will accrue over the course of the year, the reality is the full FSA allocation is available from the first day of the plan year. So, you can be confident that the money you set aside will be ready for any medical emergency or qualifying purchase right away.
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