How do I know if my FSA has a grace period?

Flexible Spending Account (FSA) plans are set to expire each year on a specific deadline. Many FSA participants have plans that end on December 31. In 2005, the Internal Revenue Service issued a notice allowing employers to provide employees an optional extension of FSA coverage – this is known as a grace period.
The grace period gives employees the chance to spend down their FSA within an additional two-and-a-half month time frame. For example, if an FSA plan year ends on December 31, participants would have until March 15 to use their FSA due to the grace period.

Filing Claims

If your grace period extends through March 15, you have until that date to incur claims and use remaining funds. Claims for services provided during an FSA grace period will be applied to the previous plan year. If expenses exceed funds from the previous FSA plan year, then these will be applied to the new FSA plan year.
You cannot file a claim for a medical service you received prior to the start of the plan year.
Claims are generally processed in 5-7 business days after FSA plan administrators received them. If you would like to check the status of your claim, contact your FSA administrator or access your FSA administrator’s website for more information. Administrators sometimes also email about claim notices.

You typically have 90 days to submit claims after the end of your plan year or grace period. Check with your FSA plan administrator how much time you have. You can submit claims as they are incurred throughout the year, as well.

Who can I contact about my FSA grace period?

If you’re uncertain whether your plan has a grace period, the best option is to get in touch with your FSA administrator. Your FSA provider has information pertaining to your account balance, payments made, and claim details. You should check your plan’s Summary Plan Description as there will be details about the grace period in there. Read more about the IRS notice here.

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