March is here and for those of you who still have a balance in your 2009 flexible spending account (FSA); keep in mind it’s use-it or lose-it. If your employer provided the 2 1/2 months grace period (e.g. March 15th), then you may have a little more time to incur the qualifying expenses.
No one enjoys losing money, so consider these tips to help you use-it:
- Be aware of how your employer’s plan works:
- Understand what qualifies as an expense (e.g. doctor’s visit co-pay, daycare expenses) and the plan period in which the expense must be incurred (e.g. period January 1st, 2009 – December 31st, 2009). Note: Some employer’s provide a 2 1/2 months grace period
- Save your receipts for qualifying expenses
- Follow the process to submit qualifying expenses by the specified submission deadline for reimbursement
- Keep a copy of any account reimbursement submissions for your records
- Verify your flexible spending account balance is accurate and that you use all of your money before the plan period end date
What has worked for you? Please share using comments.
About Flexible Spending Accounts (FSA):
Employers typically offer healthcare/dependent care flexible spending accounts as part of their benefits package. FSAs offer attractive tax savings benefits. Your payroll contributions fund the account using pre-tax dollars and account withdrawals are tax-free.
When you setup a flexible spending account, your salary is reduced to fund the account. Employee contributions are deducted from your pay throughout the year in a specified time interval (e.g. monthly, biweekly). Money in a flexible spending account may be withdrawn when you submit qualified expenses (e.g. daycare costs, contacts solution) within the employer’s specified submission period.
While this account saves you money by using pre-tax dollars, if you fail to submit the receipts for qualified expenses within the stated submission period – then you lose your money in the account.