As the end of the year approaches, consumers with a flexible spending account are looking to maximize their remaining pre-tax money. For many with FSAs, the plan year ends on Dec. 31, signaling that leftover FSA dollars must be spent down or risk being forfeited. FSAstore.com, an e-commerce site exclusively stocked with FSA- and HSA-eligible products, helps consumers manage and use their accounts year-round and reminds them to check their FSA balances.
Confusion about FSAs is widespread. Research from Alegeus Technologies shows that only 50 percent of FSA account holders pass a basic proficiency test.
In an effort to help the nearly 35 million Americans with an FSA, FSAstore.com, which provides educational information and tools to help people use their accounts, recently compiled the Top 8 questions customers ask about their plans.
1. When is the FSA deadline? FSA deadlines vary, but Dec. 31 is a popular one. FSA account holders can learn their plan-year deadline by contacting their FSA administrator, or by reading the Summary Plan Description (depending on the employer, this could be available online or via human resources office), which outlines specific account details.
2. Who is my FSA administrator? If you’re not sure who your FSA administrator is, contact your human resources department. Your FSA administrator will be able to discuss your available balance, share claims information, or answer coverage questions regarding eligible expenses.
3. What is a carryover, grace period or run-out period? An FSA can include different deadline extension options depending on the particular plan.
- If it has a carryover, up to $500 in unused FSA money could be rolled over to the next year.
- If the plan has a grace period, there is an extension of up to 2 and half months following the end of the plan year to use remaining FSA funds.
- If the FSA has a run-out period, there is additional time after the year-end to submit for reimbursement of prior-year expenses, often up to 3 months.
Employers can offer a carryover or a grace period — but not both. They’re not required to offer any of these options, but if a plan includes an extended deadline, employees have more time and flexibility in using their accounts.
An FSA can have a carryover and a run-out period, or a grace period and a run-out period, but it is best to confirm with the FSA administrator about which deadline extension(s) are applicable to the FSA plan.
4. Does FSA money roll over to the next year? FSA funds do not typically roll over, unless your FSA plan offers the carryover feature.
5. What happens to unused FSA money? Because FSAs are use-it-or-lose-it plans, unused money (or if an FSA has the carryover and more than $500 is unspent) will be forfeited if not spent by a specific deadline.
6. Which expenses does an FSA cover? An FSA can be used for various medical expenses ranging from visits at the doctor’s office, annual physicals, dental and eye care, visits with medical specialists (i.e. chiropractors and acupuncturists), and thousands of over-the-counter products.
7. Which over-the-counter products are covered? Why does Advil require a prescription? Over-the-counter items are covered by an FSA, but as of Jan. 1, 2011, any products containing medicines require a prescription for FSA reimbursement. Consumers can shop for both Rx (marked with a blue Rx logo) and non-Rx products at FSAstore.com. Items including first aid kits, breast pumps and heat wraps are among thousands of products covered without a prescription.
8. I have a lot of leftover FSA money. Can I stock up on products? It is advisable to budget FSA money throughout the year to avoid being left with a large sum at the year-end. Stocking up on too much of one item may not be considered an eligible expense. However, there are thousands of ways to spend down a large remaining FSA balance. FSAstore.com offers prepackaged bundles for any budget for baby care, pain relief and sun care.