With a new slate of temporary FSA changes being introduced in the Consolidated Appropriation Act 2021 in late December, flexible spending accounts (FSAs) are in the news yet again as millions of account holders turn the page to a new plan year and, potentially, new rules affecting how they will budget and spend their tax-free healthcare funds.
If you're one of the people who had an FSA plan year deadline on 12/31, or you're one of the 30 percent of Americans (SHRM, 2019) who have an FSA with a 2.5 month grace period, you should know about a little-known year-end provision that could help you maximize your tax savings from 2020: the FSA run-out period.
What is the FSA "run-out" period?
An FSA "run-out" period refers to the period of time in the new plan year during which account holders can file claims for expenses incurred during the previous plan year. This timeframe is chosen by the employer, not the IRS, and can last for any period of time, but the most common FSA "run-out" period is 90 days. For instance, if your FSA plan year ends on December 31 and you have a 90 day run out period, you would have until March 31 of the following year to submit claims for reimbursement.
Let's make thing one thing very clear at the outset: the FSA "run-out" period is NOT the same as the FSA grace period. The key difference being that the run-out period is to file claims from the previous year, while the FSA grace period is an extension of your current plan year to allow you extra time to spend down your remaining funds. So if you have a grace period deadline on March 15, that is the last day you can spend your remaining 2020 funds.
How can I take advantage of the FSA "run-out" period?
If you've been on top of your bookkeeping to keep receipts and invoices for FSA eligible products and services, you're already ahead of the game. The claims process during the "run-out" period is the same as during your plan year, and receipts and invoices should contain the following information. From WageWorks:
"To make sure your claims are processed quickly, please make sure that your receipts and documentation include the following five pieces of information:
- Patient's Name: The name of the person who received the service or for whom the item was purchased for. For retail store purchases, this information may be excluded.
- Provider's Name: The provider that delivered the service or where the item was purchased.
- Date of Service: The date on which services were provided or the item was purchased.
- Type of Service: A detailed description of the service provided or item purchased. A bag tag is sufficient for prescriptions.
- Cost: The amount you paid for the service or product and/or the portion that is not reimbursed through your insurance carrier."
Once you have this information on-hand, you're ready to file your claim! Simply log into your benefits portal and follow the instructions to have your claim processed. Remember, not all claims will be honored and benefits administrators may require additional documentation if a product falls outside of eligibility rules, there aren't enough funds in the account or if additional information is required to reimburse the expense.
Finally, it's important to remember that run-out periods are available as a helping hand to those who may have let claims slide over the course of a plan year. After 2020, who could blame you? But if you want to avoid the year-end scramble to file claims, make a process for filing them during your plan year instead. File claims at the end of each month, or quarterly so you can stay ahead and avoid adding one more thing to your year-end rush.
But first thing's first - check with your HR department or benefits administrator to see if your employer offers a "run-out" period, how long it lasts and what you need to do to be reimbursed for your eligible expenses. Don't leave your hard-earned dollars on the table and make sure you maximize your 2020 tax savings!
Since you have a Flexible Spending Account (FSA), you likely hear about upcoming deadlines throughout your plan year. Whether that's a plan-year deadline (by which you must use your FSA money, or risk losing it), or a Grace Period ending, or even a Run-Out Period.
Forbes published an article explaining what today's deadline - March 31 - means for Flexible Spending Account holders. It provides a detailed explanation of what the run-out period deadline means.
If you quickly want to know what you can do, here's our tip:
Check with your FSA administrator if you have the Run-Out Period deadline. Most Flexible Spending Accounts offer a Run-Out Period.
What is the Run-Out Period? This is an extended period of time (3 months following the end of your plan year) to be reimbursed for any expenses incurred during the prior plan year.
Remember these two details:
1. You cannot incur new expenses to be reimbursed.
2. Submit old receipts for expenses from 2017 to still get reimbursed.
Flexible Spending Account Claims
FSAstore.com was founded to make it easy for anyone with a Flexible Spending Account to shop for FSA eligible products. We guarantee that every product we sell at FSAstore.com is FSA eligible. Other than circumstances outside of our control, such as non-sufficient funds or a limited FSA that only covers specific expenses, we may be able to help provide you with supporting documentation for you to resubmit your claim or provide you with a full refund of your purchase.
If you had an FSA deadline ending on December 31, you may have an additional Run-Out Period ending today. Learn more about theFlexible Spending Account Run-Out.
FSA Eligible Expenses
FSAstore.com is a member of theSpecial Interest Group for IIAS standards (SIGIS), which was created to have a standard industry-wide solution for dealing with health benefit transaction processing according to IRS requirements. By working with SIGIS, we can ensure that every item is FSA eligible based on a list of IRS-approved items. What this also means is that when you use your FSA debit card at FSAstore.com, the purchase is “auto-substantiated” or automatically approved for your FSA – this gives you less of a hassle and less paperwork. However, you don’t need an FSA debit card to shop at FSAstore.com – you could easily submit a receipt to your FSA administrator for any purchase and get reimbursed.
How We Can Help
Sometimes a product purchase or claim gets denied by an FSA plan administrator. In these situations, we can provide supporting documents to have your claim reconsidered for reimbursement.
Our FSA experts are happy to assist you. Please send an email email@example.com the situation and include your order number, the item(s) SKU number and the name of your FSA administrator. The products marked with a red checkmark on our site are 100% FSA eligible. The products marked with a blue Rx icon require a prescription for reimbursement. If you bought an Rx item and did not send a prescription to your FSA administrator dated before the time of your order, then that cannot be considered a properly filed claim.
If your FSA administrator won’t reimburse you, other than for reasons outside of our control such as non-sufficient funds or a limited FSA, we will issue a full refund on the specific product. Each FSA administrator provides specific guidelines as to the items that are covered with an FSA. FSAstore.com does not determine eligibility, but follows IRS requirements. Please consult your FSA administrator with questions if you are unsure whether something might be covered by your plan.
Information for The FSA Grace Period Ending on March 15, 2014
Why Can't I Check My FSA balance via FSAstore.com?
FSAstore.com is a retailer exclusively selling FSA eligible items. We are not an FSA administrator or provider. We do not have access to any information about your Flexible Spending Account including your remaining balance, claims details, payment history or more.
Grace Period Details
If you have a Flexible Spending Account (also known as an FSA), you could have a Grace Period ending this Saturday (March 15). What does that exactly entail? Well, an FSA lets you set aside pre-tax money toward health-related expenses.
Any funds that you don't use by the end of the FSA plan year are forfeited (unless you have a Grace Period, which gives you two and a half months to still spend down your FSA). In this case, the March 15 Grace Period deadline stems from plan years ending on December 31, 2013. Depending on when your plan-year ends and if your FSA even offers a grace period, you could have a different date for your grace period. March 15 happens to be a popular grace period deadline.
Tips to Avoid Losing Your 2013 FSA Dollars
- Remaining FSA money cannot be refunded to you. Spend down any remaining funds to avoid losing them on March 15!
- Think about any expenses you've incurred since the end of last year. Make sure to submit any claims before March 15.
- Check if you have a Grace Period or a run-out period.Some FSAs have a run-out period, which is not the same as a grace period. A run-out period lets you get reimbursed for any expenses incurred during the previous plan year (so, you cannot use your FSA for any new expenses). You have until March 31 until the run-out period ends.
- Trying to figure out how to spend down your 2013 FSA? Browse covered FSA eligible expenses via our FSA Eligibility List.
IRS Changes Made in 2013
Last year, the IRS & Treasury made changes to FSAs. Employers are now allowed to offer a carryover of FSA funds (up to $500) to the next year. Not every FSA has this option. Alternatively, employers can continue providing an FSA Grace period. To find out which of the two options applies to your FSA, contact your FSA administrator this week.
The best way to find out if you have an extension period for your Flexible Spending Account (FSA) is to contact your FSA administrator. If you’re not sure who your FSA administrator is, check your FSA card or ask your HR professional.
Before you sign up for an FSA, make a conservative estimate about your future health care expenses.
It can be difficult to narrow down what these might be, but remember that you can use an FSA toward over-the-counter products, dental and vision care, and out-of-pocket costs for medical services.
What extension options could my FSA have?
- Your plan may include a grace period extension – this is a 2 ½ month extension at the end of your plan year to still use your FSA funds from the prior year. It lets you incur new expenses and use remaining funds toward FSA eligible items. Say you have a plan year ending on December 31 but you have a grace period; you would have until March 15 of the following year to incur new expenses and spend-down your FSA.
- Your plan could include a run-out. This is a set amount of time after the plan year ends during which you can file claims for FSA eligible expenses incurred during the prior plan year. Say you have a plan year ending on December 31, but you have a 90-day run-out period, so you would have until March 31 to submit claims from the previous year.
- Your plan may allow for up to $500 in remaining funds to rollover at year-end. If you have this option, up to $500 in funds may rollover to the new plan year and will be eligible for use in the new plan year or if you have a run out as well, eligible for claims submitted in the run out as well.
Tip: Contact your FSA administrator ahead of time to ask about claims procedures and any remaining funds, and also browse through your Summary Plan Description to learn the details of your account.
Note: these options are at the discretion of your employer (employers are under no obligation to offer either, but many do). Extensions are meant to help you maximize your FSA and avoid losing the money you contributed.
The IRS has a rule that if you don’t have a carryover or if you do have a carryover and more than $500 remains, you lose any remaining FSA funds by your plan’s set deadline. Avoid losing your remaining funds and shop at FSAstore.com for FSA eligible products!
As you're busy preparing for the upcoming Thanksgiving holidays, filing claims for reimbursement for your Flexible Spending Account (FSA) is the last priority on your mind.But, you might want to prepare for reimbursement just in case your plan has an upcoming deadline.
Your employer determines whether your FSA plan allows for an extension, or run-out period. A run-out period is a limited time after the FSA plan year ends. It lets you continue filing claims for any expenses that you incurred during the plan year. An FSA is a “use it or lose it” account, so the run-out period gives you the opportunity to avoid losing your unused funds.
Say your plan year ended on December 31, but your employer gives you a run-out period. You would have 90 days to submit claims – meaning your deadline would be extended to March 31.
Note: Not all FSA plans automatically include a run-out period. It’s best to check in with your HR department or FSA Administrator if you are unsure. You can also ask HR or your Administrator about claims processing prior to your deadline. If you prefer to read guidelines about your specific plan, your Summary Plan Description contains important information about your FSA (including about a run-out period). Need to spend down your FSA? Shop for FSA eligible products online via FSAstore.com.