Open enrollment for Flexible Spending Accounts (FSAs) is fast approaching, and employees are reminded to start planning. FSA Open Enrollment is Oct. 28 through Nov. 11, 2015. There are two FSA plans offered to benefits-eligible staff and faculty: the Health FSA and Dependent Care FSA.
Based on an employee’s annual election, a predetermined dollar amount is deducted each payday on a pretax basis. This money can then be utilized for eligible out-of-pocket expenses. Eligible expenses are determined and set by the IRS. Participants are encouraged to review the list of current eligible expenses. Examples of eligible expenses for the Health FSA are copays, coinsurance, and deductibles, and many more out-of-pocket expenses qualify.
The Dependent Care FSA helps with expenses for child and/or elderly dependent care, enabling employees to remain gainfully employed.
NEW $500 Carry-Over Feature for 2016 Health FSA Elections:
Beginning with the 2016 FSA plan year (Jan. 1 through Dec. 31), all 2016 Health FSA elections made during this open enrollment will feature a new $500 Carry-Over provision. The Carry-Over provision replaces the current Health FSA grace period. This means that unreimbursed 2016 Health FSA expenses of up to $500 will carry over to 2017 and beyond. Participants must remain benefits-eligible to access carry-over funds.
The current grace period limits access to unused funds to claims incurred through March 15 of the following year. Unlike the current grace period, the carry-over provision does not stipulate a deadline of March 15 of the following year for reimbursement of unused balances. Rather, the funds are available throughout the following calendar year and beyond.
The Health FSA carry-over does not affect the IRS maximum election provision of $2,550. Unreimbursed funds of up to $500 are added to the following year’s election, for a maximum of $3,050.
The current Grace Period still applies for 2015 elections. You can access unused 2015 Health FSA funds for claims incurred through March 15, 2016 with a May 31, 2016 deadline to submit claims for eligible expenses.
The IRS limits the carry-over provision to Health FSAs only. The carry-over provision does not apply to Dependent Care FSAs, therefore the permitted grace period will remain in effect for the 2016 Dependent Care FSA plan year.
During open enrollment employees have the opportunity to enroll in a Health FSA or Dependent Care FSA or both. When enrolling in a particular FSA, participants must decide how much their annual election will be for the designated time frame. In anticipation of this, everyone is reminded to start thinking of those out-of-pocket expenses in order to decide how much to elect for the upcoming plan year. Keep in mind, participants need to carefully evaluate their reimbursable expenses or risk forfeiture of unused FSA balances according to IRS rules and plan eligibility. Current FSA participants must reenroll in the plan every year if you wish to continue to partake.
Take a moment to explore these handy FSA resources:
- Using FSA Access Card and Mobile App
- Health FSA Eligible and Ineligible Expenses
- Dependent Care FSA Eligible and Ineligible Expenses
For additional information visit the HR Flexible Spending Account webpage.
For further assistance or questions, contact the Benefits office at 505-277-MyHR(6947).