Families utilizing dependent care flexible spending accounts (FSAs) are up against a December 31st deadline. Many are in danger of losing their funds. However, some parents might find some relief in their company’s run out period for the plan.
The end of the year is a busy time for people with pre-tax benefits. If you have an FSA, there’s a high chance you’ll have to spend down the money in your account so you don’t lose it. It gets even more complicated because there are different types of FSAs.
If you have a dependent care FSA, you might be relieved to know that despite the majority of 2020 resulting in the inability to use funds, you might be able to find some relief in a run-out period.
What is a Run-Out Period?
A run-out period is a feature of a plan, including a dependent care FSA, that gives you more time to submit claims for reimbursement. As the name implies, it gives you a longer window of time to ‘run out’ of your money. Which is what you want.
Make sure you don’t confuse a run-out with a rollover. These terms sound similar but are very different in their application to your benefits.
- Rollover: One of three options to protect you from losing unspent FSA funds at the end of the plan year. Allows funds (up to $550) to rollover into the next plan year to be used on eligible purchases.
- Run-out: Can be offered by an employer extending to both routine medical FSAs. (Including general FSAs and limited purpose FSAs).
A run-out gives you an extra window of time to submit claims for existing expenses. So, if you have claims that you want to submit for reimbursement, you have into the first quarter of 2021 to do that.
Lesser-known expenses you could submit a claim for
If you’re thinking, my kids were home for most of the year, I don’t have any expenses, you might find this list of unique babysitting dependent care expenses helpful. Additionally, many people don’t know that babysitting expenses provided by a family member can be reimbursed from a Dependent Care FSA.
Another overlooked category? Charges from early in the year, including transportation fees for children going from school to daycare or even from your home to a place where they were receiving care.
Finally, even a babysitter at home during the early part of the year is considered a reimbursable expense. So, think back to January, February and the first half of March. There may be some expenses from that time that could be reimbursed from your Dependent Care FSA.
Want more information on spending down your Dependent Care FSA before the December 31st deadline? Check out this article on Parents.com with our Regional Sales Manager Lauren Lippincott.
Additional reading from Benefit Resource on Dependent Care FSAs: Going Virtual: The future of child care during COVID-19?