8 Tips Employers Need To Know About The FSA Grace Period
March 15 marks the flexible spending account grace period deadline, which is the last day for those with the grace period to spend remaining funds from 2014 (for plans ending December 31, 2014).
Unfortunately, employees are often simply not aware that the grace period exists. If your plan had a year-end deadline of Dec. 31, employees could still have more time to use leftover FSA funds, if you offer the grace period.
Following changes made to FSAs by the U.S. Treasury Department in 2013, there were a few possible FSA extensions that employees should be aware of, including:
1. Carryover: If an FSA plan has the carryover feature, employees can roll over up to $500 of unused FSA dollars to the next year.
2. Grace period: An FSA can also have a grace period, which gives employees an additional two-and-a-half months to incur new expenses using prior-year FSA funds.
3. Run-out period: If a plan has a run-out period, employees typically have up to 90 days beyond the year-end deadline to submit for reimbursement for expenses incurred during the previous plan year.
FSAs can offer either the carryover feature or a grace period — but not both. If you’re sure which extension applies to your plan, contact your FSA administrator.
If your plan does offer a grace period, here are tips to encourage employees to spend their leftover FSA dollars by March 15:
4. Keep track of the balance. If employees aren’t sure how much they have left in their FSA, encourage them to contact the FSA administrator ahead of the deadline so they have time to spend down remaining money.
5. Explore eligible expenses. Employees can find information about covered expenses in the plan document or by contacting the FSA administrator.
6. Pay for medical services. Employees can use an FSA for co-pays and deductibles when visiting physicians, dentists, ophthalmologists, and for alternative medical services such as chiropractic care and acupuncture.
7. Shop for products. Health care products like breast pumps, first-aid kits, hot and cold therapy packs, and contact lenses are among thousands of other items covered by an FSA.
8. Encourage employees to submit for reimbursement of qualified expenses before it's too late. If your FSA plan year ended December 31, your FSA may allow employees to incur new expenses using 2014 funds through March 15.