To make the FSA even more valuable, employers can offer optional extensions that give employees more time to spend down tax-free health care dollars. But extensions are only effective if people are aware of them.
NEW YORK (PRWEB) January 25, 2023
As individuals and families across the country are budgeting and updating financial plans for 2023, there are a few smart money moves that should not be missed: The flexible spending account (FSA) grace period, balance carryover, and runout period. To help the millions of consumers who are enrolled in FSAs understand and make the most of these money-saving account options, Health-E Commerce is issuing these hands-on tips and reminders.
What is the FSA grace period? While a majority of FSA users have a December 31 spending deadline (the date by which FSA funds must be spent or they are forfeited), employers may choose to offer a spending extension called a grace period that gives account holders an extra 2.5 months in which to incur new expenses against any remaining FSA funds from 2022 (March 15, 2023 for those who had a December 31 plan year end). Unfortunately, even with this extra flexibility, survey data indicates that 37% of account holders with a grace period still forfeit funds.
In keeping with the company’s mission to simplify tax-free health care spending and increase consumer education, Health-E Commerce, the parent brand to FSA Store, the first and largest online marketplace dedicated to selling only FSA-eligible products and providing industry-leading consumer education and tools, wants consumers to understand these three things about the March 15 FSA grace period deadline:
- A grace period allows consumers to incur new expenses against remaining 2022 FSA dollars. The FSA grace period gives consumers the flexibility to incur new expenses against prior year FSA funds. If you had a December 31, 2022 FSA deadline with a grace period, you still have until March 15, 2023 to spend down your remaining dollars. You can use these remaining dollars on everything from doctors appointments to prescription medications to thousands of everyday health products that can be found on FSAstore.com.
- Not everyone has a grace period extension. FSA rules can vary by employer and FSA type, so consumers should contact their FSA administrator or HR department to learn what their plan deadline is, what their balance is, and if their employer has adopted the grace period extension or any other optional account features.
- Your grace period deadline may not be March 15. For benefits plans that run on a calendar year, the grace period deadline is March 15. However, for benefit plans that do not renew on January 1, the grace period is 2.5 months after the end of their plan year. For example, if the plan year ends on March 31, the grace period deadline will be June 15.
Additional FSA extension options to know.
In addition to the grace period, consumers should be aware of two additional extensions that employers may offer. It’s important to note that all FSA extensions are optional and determined by the employer.
- Carryover. The FSA carryover allowed account holders to carry over up to $570 in unused FSA funds from 2022 to 2023. For carryovers in 2023, that amount increases to $610.
- Runout Period. The FSA run-out period gives account holders up to three months following the last day of the plan year to continue to submit receipts and claims for qualified expenses that were incurred during the FSA plan year. For FSA participants with a plan year that ended on December 31, 2022, the last day of their FSA run-out period would be on March 31, 2023. These account holders have until March 31, 2023 to submit claims for expenses incurred by or before December 31, 2022.
“What consumers need more than ever right now is ways to save money and to make their dollars stretch farther, and an FSA can meet both of these needs,” said Rachel Rouleau, chief compliance officer, Health-E Commerce. “To make the FSA even more valuable, employers can offer optional extensions that give employees more time to spend down tax-free health care dollars. But extensions are only effective if people are aware of them. That’s why Health-E Commerce is working to educate consumers about FSA deadlines and the many ways they can use their tax-free funds to protect their everyday health.”
To learn what’s eligible and spend down remaining funds, explore the searchable eligibility list at FSA Store, and use interactive calculators that help budget and plan future expenses. FSA Store also offers Deadline Alerts, that help FSA users stay in front of important dates, so they never miss a deadline again.
About Health-E Commerce
Health-E Commerce is the parent brand to FSA Store, HSA Store and WellDeservedHealth, a family of online marketplaces that serve the 70+ million consumers enrolled in pre-tax health and wellness accounts. The company also created Caring Mill, a popular private-label line of health products that benefits Children’s Health Fund and enables customers to make a donation with each purchase. Since 2010, the Health-E Commerce brands have led the direct-to-consumer e-commerce market for exclusively pre-tax health and wellness benefits. Health-E Commerce plays an essential role in expanding product eligibility for important new categories within the list of eligible medical expenses.