As an FSA user, you know just how important end of year spending is to maximizing the potential of your account. However, while the "use-it-or-lose-it" rule is still in effect and many account holders must spend their funds by the end of each plan year, there are 2 vital deadline extensions that all FSA users should be mindful of: the $500 rollover and the 2.5 month grace period.
What are the $500 rollover and 2.5 month grace period?
Historically, FSA users would forfeit any unused FSA funds at the end of each plan year thanks to the "use-it-or-lose-it" rule. While this rule is still in place, two important changes have emerged over the past decade to provide a measure of relief to FSA users: the $500 rollover and 2.5 month grace period. FSA plan sponsors can choose to offer ONE of the two rules when administering FSAs, but not both.
This FSA regulation gives account holders the ability to "roll over" up to $500 in to the next plan year's account to prevent a large portion of funds from being forfeited. The FSA plan sponsor can elect to allow less than $500 to be rolled over, but the same rollover limit must apply to all participants under the current FSA plan rules. The $500 rollover does not count toward the following year's maximum election amount ($2,750 for 2020), so account holders could feasibly roll over $500 of last year's funds on top of the full election amount of $2,750 for 2020, which would give them $3,250 available for reimbursement for healthcare expenses that year.
2.5 Month Grace Period
The other option is the 2.5 month grace period. This gives account holders the ability to spend down the remainder of the previous year's FSA funds before March 15 (for FSA plans ending December 31), after which any unspent funds would be forfeited back to one's employer. Unlike the FSA run-out, which can be offered in conjunction with a rollover or grace period and provides up to 3 months after plan year end to spend down remaining funds for expenses incurred during the prior plan year only, the grace period allows users to spend down remaining FSA dollars on new expenses incurred within the new plan year as well.
How do I know if I have the rollover or grace period?
Your end of year options can determine how you will spend your allocation over the course of the year, so it's vital that you know your FSA plan details before setting an election amount for the coming year. Aspiring FSA users should inquire about these regulations during their health benefits Open Enrollment to plan out the optimal healthcare spending for the coming year.
Last but not least, if you're an FSA user and you've never heard of the $500 rollover or grace period, speak with your benefits administrator immediately! FSA plan administrators, whose information can typically be found on the back of an FSA benefits card or by contacting your HR department, can let you know the exact details of your FSA. With March 15 just around the corner, FSA users all over the country could still have money left to spend, so don't let a cent of your money go to waste!
For everything else regarding your FSA, you can rely on FSAstore.com! Shop the web's largest selection of FSA eligible products, browse product/service regulations in our Eligibility List and plan your yearly spending with our handy FSA Calculator!
As wintry temperatures pass through much of the country, it’s a good moment to think about emergency preparedness. Preparing for an emergency might not be something you think about all the time, but you won't regret having a few essentials handy when you need them. Did you know aFlexible Spending Account (FSA) covers first aid supplies? You can shop for various first aid kits and other first aid supplies directly at FSA Store.
Whether your area of the country gets a little snow, or gets hit by a full-on blizzard, preparing your home and car with first aid supplies in case of an emergency certainly can’t hurt. Winter storms can knock out power and cause other (structural) damage. If you’re traveling, why not bring a travel first aid kit along for any small pains along the way?
We've prepared a short list of some first aid items to prepare and your pre-tax FSA can cover the cost.
First aid checklist:
- A comprehensive First aid kit for travel, in the car, or at home
- Individual band-aids and bandages
- Gauze, tape and pads
- Children’s first aid – colorful band-aids or pediatric first aid kits
- Antiparasitic treatments
- Gloves and masks
Do you have the 12/31 FSA deadline? Use it or Lose it! Check with your FSA administrator or HR Department to see if your particular plan has the 12/31 deadline, or offers a grace period, or a rollover up to $500. Learn more about changes to the FSA "Use it or Lose it" rule.
Spend down your FSA withFSA eligible products at FSAstore.com
Did you forget about your Flexible Spending Account (FSA)? As you’re prepping for the holiday season, it’s easy to overlook the upcoming FSA deadline. But, there is still time to use your leftover funds before the December 31 FSA deadline (if you have that deadline – check with your FSA administrator).
Recently, the IRS and U.S. Treasury Department made some big changes to the dreaded FSA “Use it or Lose it” rule. Employers now have several options to offer employees with an FSA: either they can allow for up to $500 to be carried over in FSA funds to the next year or they can allow for a grace period extension. The grace period gives FSA holders two and a half additional months to use their FSA after the plan year ends. But, employers can’t offer both options, and also don’t have to offer either option. Learn more on our blog about FSA “Use it or Lose it” changes. It’s best to contact your FSA administrator to find out the details of your FSA and how your plan might be affected by the changes.
FSAstore.com offers an easy solution for FSA participants. We exclusively sell FSA eligible products, and we offer free tools to help you manage your FSA. You can use your FSA for co-pays, co-insurance and deductibles the next time you go to the doctor, or you can use it toward medical products and supplies throughout the year. It’s good to estimate your expected expenses each year during open enrollment. Maybe if your life circumstances have changed (you got married, you switched jobs, or are expecting a baby), so will your FSA needs.
At FSAstore.com, you’ll be able to browse thousands of FSA eligible products including first aid kits, breast pumps, shoe inserts, hot/cold packs, blood pressure monitors and contact lens care. You can also find FSA eligible service providers for your medical needs and discover which services are eligible (LASIK, dental care, chiropractic care, etc). And, of course, our FSA Learning Center and the blog will help you with any questions you may have about your FSA. Leave a comment below if you'd like an answer to any FSA-related question.
FSAstore.com Commends FSA "Use it or Lose it" Rule Change, Reminds About FSAs During Open Enrollment
FSAstore.com Commends New Flexible Spending Account Rule Allowing Employers to Offer $500 “Carryover” to Help Participants Avoid Complete Forfeiture
“Carryover” Could Increase FSA Adoption Overall by Easing Forfeiture Concern
NEW YORK, (November 6, 2013) – FSAstore.com, the only e-commerce site stocked exclusively with Flexible Spending Account (FSA) eligible products and services, remindsconsumers to take advantage of an FSA during open enrollment season. FSAs let employees set aside pre-tax income for out-of-pocket healthcare expenses including over-the-counter products, dental and eye care, and costs not covered by insurance plans for medical services.
FSA enrollment increased in the last five years to 23% in 2013 for those with private health insurance coverage, the CDC found. Given the recent changes announced by the U.S. Treasury Department to the “Use it or Lose it” provision, FSA enrollment is expected to be higher than ever this season. Changes to the “Use it or Lose it” ruleallow employers to offer a carryover of up to $500 in funds or allow a 2 1/2 month grace period at the end of year. FSA plans cannot have both options.
"Changes to the 'Use it or Lose It' rule present a significant growth opportunity for Flexible Spending Accounts,” said Jeremy Miller, president and founder of FSAstore.com. “Open enrollment season, which allows employees to opt into an FSA, is underway. The 'Use it or Lose it' provision was one reason why people shied away from FSAs. This change, coupled with the major pre-tax savings on out-of-pocket expenses, should encourage many new participants to take advantage of FSAs.”
Added Miller, "We sell FSA eligible products that people need and use every day such as first aid supplies, blood pressure monitors, contact lens solution, and breast pumps. These are just a few items our customers purchase year-round. Any adjustments made to FSA rules that empower more families to take advantage of FSA accounts, and achieve sizable tax-free savings, are a win.”
FSAstore.com is the only one-stop-shop exclusively stocked with FSA eligible products - eliminating the guesswork behind what is reimbursable by an FSA. Consumers with flexible spending accounts can access thousands of FSA eligible products, FSA eligible services, and much-needed information through the FSA Learning Center. FSAstore.com accepts all FSA and major credit cards, offers 24/7 customer service, one-to-two-day turnaround for all orders, and free shipping on orders $50+.