Employee Reminder about the FSA “use-it-or-lose” it deadline

From now through December, members are given reminders at the end of 2008 and beginning of 2009.

When contributions are made to flexible savings accounts (FSAs), they face the “use it or lose it” rule: Employees must give up balances not spent by their deadline. Balances put toward qualified medical expenses are tax free.

Normally, FSA balances not spent by the end of the year would be forfeited. In 2005, the IRS extended this deadline to March 15th at the employer’s discretion.

Employees should be notified of this deadline by their employers. Employees also should keep in mind that possible expenses are more abundant than most are aware of. A doctor’s referral or prescription is not necessary for eligibility. FSA medical compensations from an FSA consist of:

• Co-pays, deductibles, and co-insurance payments
• Corrective eye surgery
• Elective non-cosmetic surgery
• Non-prescription drugs
• Dental checkups and surgery
• Flu shots
• Prescription eyeglasses and sunglasses
• Weight-loss programs
• Programs and aids to stop smoking