Fund Your FSA for This Year’s Medical Expenses
FSAs allow you to voluntarily contribute money from your own paycheck. Generally, the FSA will be funded from your own income, although your employer may choose to contribute as well.
You may choose how much money to deduct from each paycheck to use for your health care expenses and/or dependent care costs each year.
Planning Your FSA Expenses
When signing up for your FSA, you must think about what your out-of-pocket expenses will be for the next year. Putting money in an FSA now will help you in the long run, as the money you set aside will not be subject to state and federal taxes, but you should be careful not to put more money in your FSA than you will use on qualified expenses.
Planning for Your Health FSA
Depending on your employer’s plan design, your plan may allow you to carry over up to $500 into the next plan year, or your plan may include a grace period that extends your current plan year by 77 days. Your employer also has the option to not allow either. In this case, you would forfeit any unused funds at the end of the year.
Planning for Your Dependent Care FSA
The dependent care FSA is a “use it or lose it” plan. Any funds not used by the end of the plan year (after the run-out period) will be forfeited.
Changing Your FSA
Certain qualifying events allow an employee to change an election or begin/cease participation in a plan. Common qualifying events can include marriage, divorce, birth, death, or a change in the cost of the dependent care provider.
If you separate from your place of employment, you may submit claims only for eligible expenses incurred through the last day of employment. Expenses incurred after this date are not eligible for reimbursement. Any monies left in your FSA account will be forfeited.