Workers may want to keep an eye on the balance in their health-care flexible spending account.
Temporary rules under the 2020 Cares Act that allowed you to roll over unspent FSA funds from one 12 months to the next or gave you longer to spend the money — if your company adopted the provisions — come to an end Dec. 31.
There could be a lot at money stake: Balances are an estimated 46% higher this year compared with 2021, said Rachel Rouleau, chief compliance officer for FSAStore. com.
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“People could have more money than ever left to spend and not realize they can’t carry over an unlimited amount, ” she stated. “Those temporary relief extensions are expiring. ”
Rules on how health FSAs work
Health FSAs let workers stash away pretax cash for qualifying medical expenses. The limit for 2022 contributions is $2, 850, up through $2, 750 in 2021. (The IRS has not really yet announced the 2023 cap. )
The standard deadline to use your health-care FSA money is Dec. 31 of the yr in which you make the contributions. About the third associated with companies, 36%, provide a 2. 5 month grace period to invest the money, and 42% allow you to roll over a limited amount to the next year, according to the particular Employee Benefit Research Institute. At the remaining 23% of companies, a person forfeit money remaining in your accounts after December. 31.
The temporary guidelines that are poised in order to expire permitted companies to let their own grace time period last a full season and/or remove the limit on the amount that’s allowed in order to be rolled over.
More than a third of employees with a grace period, 37%, end up forfeiting part or even all of their efforts, according to EBRI. However , which below the 48% along with a traditional Dec. thirty-one deadline who forfeit money, and 49% of those who are allowed to move over cash.
If your own company lets you roll over an amount into 2023, the maximum allowed will be $570, Rouleau said.
If you’re uncertain what the rules are with regard to your FSA, reach out to your company’s human resources department, Rouleau said. Alternatively, you can check your online FSA portal (if your company has one) for information. There also should be a phone number upon the back of your own FSA debit card that you may call.
The list associated with FSA-eligible items was expanded in 2020
Meanwhile, the list of eligible medical expenses that will qualify for FSA use was expanded by Congress within 2020, and that applies to you no matter what company you work for. So you may be able to find eligible products you commonly use as a way to avoid losing funds.
For starters, over-the-counter drugs no longer need a prescription to qualify. This includes things such as cold medicines, anti-inflammatories and allergy medicine. Additionally , menstrual care products are now eligible, as are items that have become pertinent during the pandemic: at-home Covid tests, masks, hand sanitizer and other personal protection equipment used to combat the virus.
Be aware, however, that the IRS does not allow stockpiling , which generally means you can’t buy more of a product at one time than you can use in that tax year. The specifics, though, are determined by FSA administrators.
And, of course , you can use your FSA funds for expenses such as doctor and dentist appointments, prescription drugs and other health-care services such as acupuncture and addiction treatment.
There also are items that you may not know qualify, such as sunscreen, thermometers, eyecare services and products, baby monitors and pregnancy tests. FSAstore. com has a list of eligible items if you are uncertain whether something would qualify.