The grace period is an additional 2.5 months following the plan-year close to incur expenses against the previous plan year’s election. This gives employees some additional time to use remaining funds. If the carryover option is elected, it will replace the grace period option.
The availability of carryover funds differs when carrying over between a healthcare to healthcare FSA versus from the healthcare to limited purpose FSA.
– Healthcare to Healthcare: The carryover amount is available to the participant on the first day of the new plan year. This means that the carryover amount is simultaneously available to pay previous plan-year expenses and current plan-year expenses during the previous plan year run-out period.
– Healthcare to Limited Purpose: The carryover amount is available to the participant on the first day following the end of the run-out period. This means any current-year dental or vision claims incurred during the run-out period that were not reimbursed by a current-year limited purpose election would be reimbursed once the carryover funds are available.
Your elections into the the Dependent Care FSA become available as they are contributed. As you incur daycare expenses, you will be reimbursed up to the amount that has been contributed thus far in the year. For example: You elect $5,000 and have $208 taken out of each paycheck throughout the year. After two (2) pay periods you submit a daycare claim for $500. Your current dependent care balance is $416. You will be reimbursed $416 immediatley and following your next payroll contribution, you will be reimbursed the remaining $84.
They will be available on the first day of the new plan year unless you enroll in a Health Savings Account. Which will require your funds to carry-over into a limited purpose FSA. If this occurs, your funds will be available at the end of the current plan years run-out period.
It depends on plan design. Frequently an HRA is offered is a reimbursement account to cover healthcare expenses incurred by you or your family members covered under the employer’s insurance plan. Check with your employer’s benefit department for more details.
