Make a Plan for Extra FSA Money
As the coronavirus rages on, it’s easy to lose track of time. If you have a ton of money in flexible spending accounts (FSA), you may know that the deadline for spending is approaching, and with fewer ways to spend money on medical expenses or childcare, many people may find themselves struggling by the end of the year. … Luckily, there is still time to come up with a plan for your FSA before time runs out. The IRS released new options this year to make it easier for the FSA to spend in the face of the pandemic. There is one catch, however: your employer must accept these changes, so you should check with your company to make sure you are eligible. Here’s what you need to know.
Modify FSA Fee
Generally, you can only make changes to your employee benefits during the Fall Open Enrollment, but the new IRS rules may allow for mid-year changes. It may be possible to reduce the FSA’s health care or FSA dependency care contributions, which could free up funds for other expenses. This is also a chance to review your health insurance. The new IRS rules say your company can also authorize changes to your health plan.
More time to renew the FSA for 2019
For those who have not yet spent their 2019 FSA balance, the IRS has extended the grace period. While your previous grace period for 2019 could only have been until March 15th, you now have until December 31st to spend your money.
Increased renewal limit for 2020
If you can’t spend your entire FSA balance by December 31st, there might be good news : The IRS says you can carry over $ 550 for 2021, which is $ 50 more than this year’s limit. While the new rule doesn’t add much to the budget, it could be a small cushion for spending next winter.
More Ways to Spend FSA Money on Health
Another change to be aware of: you now have more ways to spend FSA money . CARES allows you to spend your balance on drugs at the pharmacy, such as pain relievers or allergy pills, without a prescription. You can also use FSA funds to pay for high-priced menstrual items such as tampons, pads, cups, and inserts.