Buzz
As the pandemic continues, it’s easy to lose track of time. If you’re sitting on a pile of flexible spending account (FSA) funds, you might be aware that the deadline to use them is quickly approaching. With fewer opportunities to spend on medical costs or childcare, many people may find themselves scrambling by year-end. Fortunately, there’s still time to plan your FSA spending before the clock runs out. This year, the IRS has introduced new options to help you use your FSA money during the pandemic. However, there's a catch: your employer must adopt these changes, so it’s crucial to verify with your company if you’re eligible. Here’s what you need to know.
Adjust Your FSA Contributions
Normally, changes to your employee benefits can only be made during the fall open enrollment period. However, new IRS rules may allow mid-year adjustments. This could include reducing contributions to your health FSA or dependent care FSA, potentially freeing up funds for other expenses. Additionally, it's an opportunity to reconsider your health insurance. According to the new IRS guidelines, your employer may permit changes to your health plan as well.
Extended Time to Use 2019 FSA Rollovers
For those who haven’t used up their 2019 FSA funds, the IRS has granted an extended grace period. What was previously a deadline of March 15 is now extended until December 31 to spend your remaining balance.
Increased Rollover Limit for 2020
If you’re unable to spend your entire FSA balance by December 31, here’s some potential good news: the IRS allows you to roll over $550 into 2021, a $50 increase compared to this year’s limit. Though the adjustment isn’t substantial, it could provide some extra flexibility for spending next winter.
More Options for Spending Health FSA Funds
Here’s another update: you now have additional options for using your FSA funds. Thanks to the CARES Act, you can now use your balance to purchase over-the-counter medications, such as pain relievers or allergy tablets, without needing a prescription. Additionally, FSA funds can be used to cover the cost of menstrual products, including tampons, pads, cups, and liners.
