Have a year-end FSA deadline?
By Jeremy Miller, CEO and Founder of FSAstore.com and HSAstore.com
Open enrollment is a done deal for many companies, but employees – especially those who are facing a year-end flexible spending account deadline – still need support and direction from human resources and benefits professionals.
Recent surveys have shown that consumers still don't fully understand how their spending accounts work and, more importantly, that they look to their employers as a source of education and information about how to use their accounts. You can improve employee education, engagement and satisfaction with your company's FSA by reminding employees of these key spending account tips and reminders.
1. When is the deadline to submit expenses?
For many employers, December 31 is the deadline for employees to spend down FSA funds – or risk forfeiting unused dollars. This is commonly known as the “Use-it-or-lose-it" rule.
2. Is there an extension for spending FSA dollars?
Be sure to communicate clearly (and often) if your company offers one of the following plan features that give employees extra time to spend down their FSA or submit expenses for reimbursement:
- Carryover or Rollover Option: This allows employees to carry over up to $500 of unused FSA dollars to the next plan year. This amount is added to their balance for the next year.
- Grace Period: A grace period gives employees two-and-a-half months beyond December 31 (until March 15) to incur expenses and spend unused FSA dollars.
- Run-Out Period: A run-out period gives employees additional time (usually 90 days) beyond the end of the plan year to submit reimbursement requests for eligible expenses, but only if those expenses were incurred during the plan year.
Employers can offer the carryover option or a grace period, but not both. Your company is not required to offer either of these options, but if your plan includes an extended deadline, that means employees have more time and flexibility to use their accounts, so be sure they understand this benefit.