What happens to my FSA money at the end of the plan year?
Run-out period
Extra time at the beginning of a new plan year during which you can submit claims for the previous year's expenses and be reimbursed using the previous year's funds.
Grace period
The last date you can create a qualified expense and draw from the previous year's funds. If your employer offers a grace period, it acts as an extended end date, since you can submit new claims and swipe your benefits card from the current year while paying with the previous year's funds.
Rollover
When money that's left in your account at the end of the year is rolled over to the next plan year after the runout period. You may be allowed you to roll over up to $610, but the exact amount is set by your employer. Only FSAs and LPFSAs are eligible for rollovers.
Rollover funds don't count toward your annual election, so you can still contribute up to the $3,050 maximum for 2023 FSAs even if you roll over money from 2022.
Important: Your employer can offer either a grace period or a rollover, but not both. They're also not required to offer either and can change their policy each new plan year.
Example
Suppose you have an FSA account in 2022 and there's a 90-day run-out period and a 90-day grace period.
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Run-out period. You can submit claims for any eligible expenses incurred in 2022 until March 31, 2023. Your leftover 2022 funds would be used to reimburse these claims.
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Grace period. You can submit claims for any eligible expenses that occurred between Jan 1, 2023 and March 31, 2023 until March 31, 2023. Your leftover funds from 2022 would be used to reimburse these claims.
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Rollover. Starting from April 1, 2023, you can use rolled-over money (up to $610) from 2022 to pay for eligible expenses that occur between Jan 1, 2023 and Dec, 31 2023.
Note: The key difference between the runout date and the grace period is the dates of service. Forma reviews claims based on service date (as opposed to payment date) per IRS guidelines.
If you have any questions about this, please reach out to our customer support team at support@joinforma.com or send us a live chat message through your Forma mobile app!
For questions regarding pre-tax accounts (HSA, FSA, DCFSA, etc.) you can also reach us by phone at 844-902-2902 on Monday through Friday, 8 AM EST - 8 PM EST. We're here to help!