Americans with flexible spending accounts for health care spending could risk losing money to forfeiture if they don’t spend the funds before the expiration deadline — which for many is fast approaching. .
See: What is an FSA and how it works?
Find: surprising things you can buy with your FSA
More than $1 billion could be lost in 2022, CNBC reported, citing an estimate from FSAstore.com. Many of these forfeitures could take place by March 15, the spending deadline established by a two-and-a-half-month grace period that came into effect on December 31, 2021.
With FSAs, workers can save pre-tax money for eligible medical expenses or dependent care expenses. The 2022 limit for health care BSO contributions is $2,850, up from $2,750 in 2021.
As CNBC noted, the standard deadline for using FSA money for health care is December 31 of the year you pay the dues. But more than a third of employers (35%) are giving a two-and-a-half-month grace period to spend the money, according to the Employee Benefits Research Institute.
If you don’t spend the money by the deadline, you lose some or all of it – which happens to 37% of workers with a grace period, EBRI estimates. This is still below the 48% of workers with a traditional deadline of December 31 who lose money and 49% who are allowed to carry the money over to the following year.
“We’re concerned that if workers don’t understand their deadlines … they’re losing money,” Rachel Rouleau, vice president of compliance at Health-E Commerce, parent company of FSAstore.com, told CNBC.
Browse: HSA against FSA – What is the difference?
For workers who are fuzzy about the rules, she recommends contacting your company’s human resources department. You can also check your online FSA portal for information if your company offers one, or call the phone number on the back of your FSA debit card.
If you’re unsure how to spend the money in your account, you now have far more choice than before thanks to an expansion of what qualifies as eligible congressional medical expenses.
For example, you no longer need a prescription to buy over-the-counter medicines – including cold medicine, anti-inflammatories and allergy medicine – with your FSA card. Other items now eligible include menstrual care products, home COVID tests, masks and hand sanitizer.
And as always, FSA funds can be used to cover doctor and dentist appointments, prescription drugs and other healthcare services.
“There are literally thousands of ways to spend funds on things they need before it’s too late,” Rouleau said.
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