You have extra money in your Flexible Spending Account. Now what?
Flexible Spending Accounts (FSAs) are a great way to help reduce your taxable income while paying for eligible medical and dependent care expenses. But if you’ve experienced a decrease in those expenses as a result of the COVID-19 pandemic, you may be wondering what will happen to the funds in your account.
Use or Lose
Healthcare Flexible Spending Accounts (Healthcare FSAs) and Dependent Care Accounts (DCAs) are both "use or lose" accounts. This means, if you don’t use all the money in the account at the end of the plan year, it is lost. In response to COVID-19, recent legislation has offered some relief for Healthcare FSA participants, including the opportunity to make mid-year election changes and take advantage of extended expense and claims periods. These new rules provide some relief from the “use or lose” rules.
To find out if your specific plan will allow for these changes, contact your employer.
With an increased focus on social distancing, many people have delayed elective medical procedures or care. If you have decreased your medical spending this year, there may be extra funds collecting in your Healthcare FSA.
One way to spend excess funds is by purchasing eligible medical supplies you need. Examples of eligible expenses include thermometers, sunscreen (SPF 15 or higher), first aid cream, and bandages. Plus, as a result of the Coronavirus Aid, Relief, and Economic Security Act, participants may now use their Healthcare FSA dollars to purchase over-the-counter drugs without a prescription. You may also purchase menstrual products with your HCFSA.
And, remember to keep your receipts to submit for reimbursement on all eligible medical expenses.
While many of these products may be purchased in stores, you don’t have to leave the house to find what you need. Visit FSAStore.com for a convenient way to spend Healthcare FSA dollars online.
Dependent Care Expenses
For many, the pandemic has resulted in daycare closures. If you are without childcare, you may be able to change your annual election amount for your Dependent Care Account. Please view our COVID-19 FAQ page for more information about election changes.
If you are paying a babysitter or relative to help care for your children so you can continue working, you may also be able to submit those expenses for reimbursement. View the list of eligible DCA expenses to learn more about each specific situation.
For up-to-date information regarding your reimbursement accounts, check out our FAQs or contact your American Fidelity account manager.