One of the issues with an FSA is that the money must be spent within the plan year that you contributed.
FSA “USE IT OR LOSE IT” AND ROLLOVER INFORMATION
What is “use it or lose it”?
One of the issues with an FSA is that the money must be spent within the plan year that you contributed. This means that you could potentially lose the unspent dollars at the end of the year unless you can “rollover” some of the dollars for the following year’s expenses. (See below).
Here are some possible solutions to combat the “use it or lose it” clause:
- Only contribute the amount that you think you will use during the year.
- Check to see if you have the rollover option available to you.
- If you no longer have any medical expenses for the year, think about using the money on non-prescription items such as bandages, sunscreen, blood pressure monitors, home medical equipment, pregnancy needs, thermometers just to name a few.
A rollover is defined as a “grace period” that you may be eligible for to use your remaining funds in the following year.
- The grace period allows you 2 ½ months into the next year to spend your FSA rollover dollars.
- Up to $500 may be rolled over if you have a Health FSA or Limited Scope FSA.
- Rollovers do not apply to Dependent Care FSA’s.
- Unlike HSA’s, FSA’s end if you are terminated from your job, unless you are offered COBRA continuation.
- You are only reimbursement eligible during employment.
- There is usually a predetermined period for filing claims from the previous year, this is called the “run-out” period.
- You cannot invest your FSA funds