FSA Grace Period or $500 Carryover – Did You Know?

If you are having difficulty using up the funds in your medical flexible spending account (FSA) before the end of the year, your employer might offer you relief from the “use it or lose it rule” through a grace period or carryover.

Under IRS regulations, employers that offer FSA plans can offer one (not both) of the following options for unused FSA funds:

• A 2.5-month grace period, which means you will have until March 15, 2019 to use up your 2018 FSA funds.
– OR –
• A carryover of up to $500 of your 2018 FSA funds into your 2019 FSA. The carried over amount will not count toward your maximum allowed contribution for 2019, and can be spent anytime during 2019.

Although the law does not require employers to offer either option, most employers do offer one or the other. Check with your employer’s benefits expert to find out if an FSA grace period or carryover is available to you.