The basics of FSA deadline extensions

If your organization offers an FSA deadline extension, it’s important to educate employees about which deadline option you offer and how it affects them. Here are a few basic descriptions that HR teams can use to help employees understand and make the most of FSA deadline extensions.

Grace Period. The FSA grace period gives employees an extra 2.5 months in which to incur new expenses against any remaining FSA funds from the prior plan year. For example, if your plan year ended on December 31, 2024, employees with a grace period have until March 15, 2025 to spend down any remaining 2024 funds. Employees should be aware of this timeframe and take time to check their remaining balance and explore how funds can be used to pay for expenses like doctor appointments, prescription medications, and thousands of everyday health products.
Runout Period. The FSA run-out period gives employees up to 90 days following the last day of the plan year to continue to submit receipts and claims for qualified expenses that were incurred during the plan year. For example, if your plan year ended on December 31, 2024, the last day of the FSA run-out period would be March 31, 2025; giving employees extra time to submit claims for expenses incurred by or before December 31, 2024. As with the grace period, employees should check their balance now and examine their 2024 purchases and health care visits for reimbursable expenses.
Carryover Feature. The FSA carryover allows account holders to carry over up to $640 in unused FSA funds from 2024 to 2025. It’s important to note that either a carryover option or a grace period is allowed, but not both. Any amount carried over does not impact future contributions, so employees who rollover unused FSA funds can still contribute the full amount to their FSA in the coming year.

Understanding FSA eligibility

While it’s important to understand and heed FSA deadline extensions, it’s equally important to educate employees about how they can use their tax-free funds, so they don’t miss out on opportunities throughout the year, and so they can map out their spending and finish the year healthy and with a fully-utilized FSA. As you’re communicating about any FSA deadline extension your organization offers, HR teams should also remind employees that these funds can be used for:

Doctor appointments, dental visits, vision care, chiropractic services, acupuncture, and a variety of other health care services.
High-tech health diagnostic and monitoring devices that track cardiac activity, sleep, heart rate, blood pressure, blood sugar, fertility, and more.
Everyday health care products like over-the-counter medications, drug-free pain relief, sunscreens and lip balms with sunscreen, acne products, skincare products, and menstrual care products.
Baby health monitors and products for new moms and children of all ages, including overnight underwear, gas relief drops, diaper rash creams, and eczema creams.
Telehealth services to support weight loss and weight management, sexual health, menopause, mental health, vision care, sleep apnea, and more.
To help employees make smart, simple buying decisions, direct them to resources like interactive calculators that will help them budget and plan for future health care expenses, as well as tools like the searchable eligibility list at FSA Store, so they can use their tax-free dollars for everyday health needs or to pay for special health care needs.

If your employees missed the December 31 FSA deadline, make sure they don’t miss out on this last opportunity to use their tax-free funds to improve their health and make their money go farther.

Instant Insights /

Help employees make the most of FSA deadlines

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