Have you forfeited your FSA funds?

Have you forfeited your FSA balance?

For many FSA participants, December 31 marks the end of a plan year. FSA participants generally have a basic understanding that FSAs are a “use-it-or-lose-it” benefit. However, the specifics and timing regarding a forfeited FSA balance are often a little fuzzy. In fact, come January 1, the most frequently asked question is, “can I still use my FSA funds?” or some variation there of. Unfortunately, there is not a one-size-fits-all response.  Participants need to look to their FSA plan documentation to determine how their specific plan works.  But, we can provide a few tips and best practices on what you should look for. The good news is, no one has an officially forfeited FSA balance just yet.

Every plan has a run-out period

The run-out period is the time following the end of the plan year in which eligible claims can be submitted, but not necessarily incurred. This means when you caught the holiday bug all of your relatives were sharing and ended up in emergency care on Dec. 26, you still have a period of time to submit the expense for reimbursement. The run-out period will vary by employer but typically will be 30, 60 or 90 days. Just remember, the run-out is only for claims already incurred by the plan year end date. So, dig through your pile of receipts and see if there are any claims you have to submit.

Some plans have more time to incur expenses

Employers have some flexibility in how they choose to handle the end of the plan year. One option is to provide an Extended Grace Period (EGP). EGP provides participants with an additional 2.5 months to incur expenses. For calendar year plans, this means you can incur new eligible expenses until March 15 and claim them against your prior year balance. Just remember when submitting a claim to indicate you would like the expense to go against your prior year balance. If you have a benefits card tied to your FSA, you will want to confirm if the card will draw against prior year expenses or if it can only be used for current year balances.

Other plans have rollover

Employers can alternatively decide to offer a rollover option. With the FSA rollover option, you may be eligible to roll over up to $500 of unused balances. Note, you cannot have both EGP and rollover. If offering rollover, your employer can set certain restrictions such as a minimum amount, alternative maximum amount (less than $500), and if an election must occur in the new plan year. All of these details should be outlined in you plan documentation. For plans administered by Benefit Resource, these details are found in the Plan Highlights, which are available from the secure BRiWeb login.

So if you find yourself in a new year with an old balance, you might still have a few options and can avoid a forfeited FSA balance. Although, it is best to find out what they are before you truly forfeit unused FSA balances.