Deadlines coming soon for relaxed rules on flexible spending accounts
PITTSBURGH (KDKA) -- You may not even realize it, but you could lose out on hundreds of dollars when the year ends -- and it's money you're already setting aside for yourself.
Call this a big red flag. This is one of those things that we do when we set up our insurance policies with our employers and then potentially forget about.
But those who have flexible spending accounts could be leaving a lot on the table this year.
The flexible spending account is what you set up to cover your healthcare costs and it allows you to deduct those costs from your paycheck pre-tax -- so you aren't charged taxes on that money.
Now here is the hitch -- during the pandemic, the government relaxed the rules that required you to use the money in your FSA by the end of the year or lose it.
That rule is returning, so without getting into all the complicated details, you run into the potential of losing the money you have set aside if you don't use it by the end of the year.
Because of the rollover being allowed, you may have more money in your account that you realize, so you should check your balance and see how your employer is handling this change.
There are a lot of things you can use the money for.
Some examples include:
- Over-the-counter medications
- Blood pressure monitors
- Menstrual pads and tampons
- COVID supplies like masks and hand sanitizer
You just have to spend the money before the deadline and have the receipts to prove it.
This only applies to FSA's, not health savings accounts, or HSA's, which are even more complicated, and also not impacted by this rule return.
If you don't use the money and end up losing it, it will be returned to your employer and can be used for administrative cost of handling the plan or reducing annual premiums.
Or, if your employer contributes to the FSA's. it can be distributed equally to everyone who is in the program.
The bottom line is that you should find out what you have and what you need to do know, since the deadline is at the end of the year.