Are You Maximizing Your Flexible Spending Account?
Flexible Spending Account Management
At Valley Schools, we are always searching for ways to make our employee’s benefit experiences easy and advantageous. A simple way to enhance that experience on an existing benefit plan is to allow carryover and/or a grace period for your Flexible Spending Account plans. Now is the perfect time to explore this option and make a change before the start of the new plan year.
What is Carryover?
Carryover allows participants to carryover up to $500 in their unused Health FSA to the following plan year. Everyone knows this is a “use it or lose it account”, but by allowing $500 to be carried over, employees can be assured their funds are not simply lost at the end of the plan year if they over estimated expenses, or failed to submit receipts in time. It’s important to note that this provision does not apply to Dependent Care FSA funds.
What is a Grace Period?
Employers can institute a “grace period” of up to two and a half months into the next year allowing employees to claim any remaining FSA funds for medical reimbursement accounts as well as dependent care accounts. It provides participants additional time to submit receipts for qualifying costs.
Can we offer both the Carryover and the Grace Period?
You can offer the $500 dollar carryover on your medical reimbursement account, and the grace period on your dependent care account. You cannot offer both carryover and grace period on the medical reimbursement account.
Only the grace period is allowed on the Dependent Care FSA.
What do I need to do to make this change?
If you are a Valley Schools member, contact your Valley Schools Account Manager and they will coordinate making the change with your FSA carrier for the 2020-21 plan year. If you are not a member, contact your Cafeteria Plan vendor to complete the required forms.
You may see an increase in participation by offering this enhancement, so budget accordingly for funding your FSA accounts.
Your FSA vendor will have supporting flyers to help you communicate this additional advantage to your FSA coverage that you can post on your benefit’s portal, or, intranet.
Valley Schools actively helps our members manage all aspects of their employee benefits strategies. Contact us today to see how we can assist your school or municipality.
