2020 Healthcare FSA - Use it or Lose it?

[Ncc1701]

So like many people, we've been hesitant about going to doctors offices this year so we haven't used up any of the money we allocated to the Healthcare FSA.

Given the pandemic, has there been any talk about extending the expense period or do we have to start spending the funds asap?

 

[cathy63]

Yes, but your employer had to choose to amend their plan to adopt the changes that the IRS allowed. Your employer could have allowed you to change your deferral amount mid-year, or if your plan ended during the calendar year they could allow you to apply the deferred amount to expenses incurred up to December 31.

Plans were already allowed to have a carryover provision or a grace period. All the plans I ever had while working had the grace period rather than the carryover though.

If you didn't hear about any of these changes, I'm guessing that your employer chose not to adopt them, but you should ask your plan adminstrator to confirm that.

Here are the relevant IRS notices:
- https://www.irs.gov/pub/irs-drop/n-20-29.pdf
- https://www.irs.gov/pub/irs-drop/n-20-33.pdf

The HEROES Act passed by the House also has some related provisions, but I'm pretty sure that's dead in the water now and will never be taken up by the Senate.