Revisiting FSA rollovers

FSA deadlines, for the newcomers

If you've visited our Learning Center before, you probably noticed we spent a lot of time focused on the 3/15 Grace Period Deadline. That's because many FSA plans have an end-of-year deadline of Dec. 31, with many offering a grace period to extend that deadline until the middle of March.

But be sure – and we cannot stress this enough – to check with your plan administrator to confirm this deadline, as well as whether your plan offers a grace period, a runout period, or rollover options.

If you confirm you have a Dec. 31 deadline and a grace period, the next FSA date to mark on your calendar is March 15. This marks the end of your grace period. Having a grace period means you have until March 15 to spend your FSA funds from the previous year before forfeiting the cash. Then there's your runout period deadline of March 31 which is offered only by some plans. This is the deadline to submit receipts for FSA-eligible expenses you incurred before Dec. 31.

If you don't have a grace period option, you may have the option to roll over up to $610 of your unused FSA funds from the previous year. More on that in the next section.

Tell me more about FSA rollovers

So you've spoken to your plan administrator and determined that you have the option to roll over $610 of your unused FSA funds from last year. This is great news. For one, it means your unused FSA funds aren't totally lost. Moreover, an extra $610 is no paltry sum.

Use it to start your FSA on the right foot this year. Save it for an upcoming procedure, a large FSA-eligible purchase you anticipate this year, or even just everyday FSA-eligible items like contact solution or allergy medication (which is eligible with an Rx from a doctor).

(I know we blow through both of those items at my house, especially during allergy season.)

This $610 could make a huge dent in your estimated health care costs this year. We're not just talking about buying bandages and athletic tape.

Is an FSA right for me?

Still unsure as to whether an FSA is the right option for you? After all, you're young and healthy and aren't expecting any big health care expenses this year. Plus, that's a lot of money to take out of your check each month. But FSAs can be used to pay for a variety of health care spends, from screenings for women to new parent must-haves, even some baby health supplies.

While there is no right answer when it comes to whether an FSA will work for you and your financial situation, here's a quick FSA fact sheet.

• FSAs are deducted from your salary pre-tax, which means you save money on taxes for eligible health care expenses, plus it lowers your taxable income.
• An FSA also helps to cover the out-of-pocket costs of high-deductible health plans (HDHPs), which are becoming an increasingly common health care option for many employers.
• You also may have the option to roll over $610 of your unused FSA funds from last year or a grace period with remaining time to use your dollars which means the old use it or lose it rule may not entirely apply.

No matter how you manage your unused FSA funds, it's always nice to know that "use it or lose it" doesn't have to be a burden. With a $610 rollover, you'll be able to create a budget that works for your family's specific needs, without deadlines looming over your head.

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