Don’t Lose Your FSA Funds

Don’t Lose Your FSA Funds

Do you hold a Flexible Spending Account (FSA) for health care expenses? If so, you will need to incur qualifying expenses by December 31st in order to use remaining funds in your FSA account.

An FSA allows employees to use tax free dollars to pay medical expenses not covered by other health plans. For 2019, employees who participated in an FSA could contribute up to $2,700 during the 2019 plan year. If used for qualified medical expenses, contributions are not subject to federal income tax, Social Security tax or Medicare tax.

FSAs are a use-it-or lose-it plans. Participating employees must incur eligible expenses by the end of the plan year or forfeit the unspent amount. However, some employers allow employees a carryover option or grace period. Under the carryover option, an employee can carry over up to $500 of unused funds at the end of 2019 and have those funds available in 2020. Under the grace period option, an employee has until two and a half months after the end of the plan year to incur eligible expense. If you are unsure if this is available to you, ask your employer.

See this IRS article for additional information.

To view a list of list of examples of qualified medical expenses, see page 5 of IRS Publication 502.

Colleen Minnich