Yahoo Movies Flex Spending Account Deadlines Have Returned
Among the many government programs initiated during the COVID-19 pandemic was an IRS initiative that gave holders of health flexible spending accounts greater latitude to carry over unused amounts and extend the permissible period for incurring claims. Now those relaxed rules are coming to an end.
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FSAs let workers set aside pretax money from their paychecks for medical and dental care not covered by health insurance plans. Employers set a deadline for when employees must spend the funds or forfeit them, usually by the end of the calendar year.
The IRS eased those rules during the pandemic, but with the pandemic mostly over, the agency will soon return to the old rules. This means some workers might have more cash than usual to spend before the deadline hits.
“If ever there was a year to pay attention to the rules, this is it,” Steve Durso, associate director of benefits accounts at Willis Towers Watson, told The New York Times.
During the peak of the pandemic, many FSA account holders delayed in-person medical care and ended up amassing large sums of money in their accounts. That was no problem in 2020 and 2021 because the U.S. government allowed employers to extend spending deadlines by up to a year, or they let workers roll over their entire balances into the next year.
Now that the rules are returning to pre-pandemic norms, some FSA account holders might need to crank up their spending to ensure they don’t leave money behind. Rachel Rouleau, chief compliance officer for Health-E Commerce, advises workers to check their FSAs to see if they have cash that must be spent by Dec. 31, or if their employers offer a grace period through March 15, 2023 or some other date.
As the NYT noted, it is unclear how many workers might be affected by the expiration of the relaxed FSA rules. A total of about 16 million workers contribute to an FSA, according to Jake Spiegel, research associate with the Employee Benefit Research Institute.
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If you have an FSA, you should go ahead and confirm various deadlines with your employer, Durso advised. Although expenditures must be incurred by the deadline, employers can still offer a “run out” period of several months after the deadline, during which workers can still submit receipts for reimbursement.
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This article originally appeared on GOBankingRates.com: Flex Spending Account Deadlines Have Returned
