Spring officially started last week, and it's hard to believe that March is almost over. While you're focusing on the beautiful weather that spring has in store, it's also a good moment to evaluate where your Flexible Spending Account (FSA) stands.
March is a big month for many Flexible Spending Accounts. There are a few big deadlines that occur for FSA plan years that ended on December 31, 2013. A lot of FSAs have a grace period and/or a run-out period that are ending in March.
So, what's the difference between the two?
If your FSA plan has a grace period, you have up to two-and-a-half months at the end of your plan year to spend unused FSA funds and incur new FSA eligible expenses. Any money that's leftover at the end of the grace period is forfeited due to the “Use it or Lose it" rule. You cannot cash out any remaining FSA funds, as money can only be used for FSA eligible expenses. For example: If you had a December 31 FSA year deadline, your grace period would allow to use your 2013 FSA funds through March 15. A grace period is optional, and the specific deadline also depends on when your plan year ended.
If your FSA plan has a run-out period, you have an extended time at the end of the FSA plan year to submit receipts for reimbursement. You can only get reimbursed for claims incurred during the previous FSA plan year. The run-out period is usually 90 days after the plan year ends. For example: If your FSA plan year ended on December 31, the run-out period ends on March 31, 2014. The run-out period is optional, and its deadline date is determined by when your plan year ended.
Chances are you have either a grace period or a run-out or both, but because these are optional, it's best to check in with your FSA administrator. If you aren't sure who the FSA administrator is, you should consult your company's HR department to find out.
Learn more about your Flexible Spending Account via the FSAstore.com Learning Center. If you have a question, feel free to comment below on this blog post, too!