Flexible Spending Account Deadline

March 13, 2010

The flexible spending account deadline is one that you don’t want to miss if you still have funds from last year in your FSA.  As you’re probably well aware, you lose any money left in your flexible spending account that’s not spent by the FSA deadline.

Flexible Spending Account Grace Period

A few years ago the IRS created a grace period so that you can spend money from your FSA into the first few months of the following year.  It seems like our family always uses this FSA extension, spending our money through the Spring of the next year.  It’s hard to forecast exactly how much money you’ll spend on qualifiying expenses for the entire next year so the grace period does offer a little flexibility in the whole FSA system.

Flexible Spending Account Contributions

If you underestimate what your medical expenses will be the upside is that you don’t leave any money sitting in your account at the end of the year; and the downside is that you pay tax on more of your income.  If you overestimate what you’ll spend then you pay tax on less of your income BUT you have money in your FSA account in danger of being lost. 

That’s where the grace period comes in handy, you can still spend your flexible spending account contributions into the following year.  Since we haven’t qualified for medical expense income tax deductions in years past we’ve tended to overestimate our FSA contributions to help bring down our income and then spent the remaining amount January & February of the next year.

Flexible Spending Account Deadline

The time has come this year, the deadline to spend your FSA money from last year is Monday. You earned that money so don’t let it go to waste!  Here are some flexible spending account strategies if you still have a lot of money left to spend. 

If you’re not sure if you still have money from last year, most FSA adminstrators allow you to access your balances by phone or online, so check them out today.  Spend what you can on eligible expenses this weekend and fax in your claim forms on Monday. You typically have until sometime in May to actually submit your reciepts but it’s better to send them in right away so you don’t forget.

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Ben

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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6 Responses to Flexible Spending Account Deadline

  • Peter Roberts

    I have an FSA through United Healthcare. We submitted claims for expenses by their 3/31/10 submission deadline, but they were rejected. We told them that we want to submit other expenses which are eligible, but they’re saying we can’t because we missed the 3/31 submission deadline. The federal guidelines say the submission deadline is 4/30. Any ideas on my recourse with Untied Healthcare and their 3/31 deadline?

  • Daddy Paul

    I always find it hard to not spend all the money in the 125 plan.
    Worse comes to worse get yourself an extra pair of glasses or buy a box of nicorette for someone you want to quit.

  • Jamel Rose

    Companies typically offer two types of spending accounts. The most popular is a medical FSA, where a worker sets aside money to pay for routine items such as health insurance copays, uninsured treatments (vision care for example) or even over-the-counter drug purchases.

  • PT

    Thanks for the reminder. I’ve got to get on this. I have some funds left to get because I had a reimbursement request rejected for poor documentation. Doctor’s offices are horrible about giving clear invoices for their services, and the HSA management company wasn’t having it. So annoying.

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