As the end of 2021 approaches, anyone with a flexible spending account (FSA) should check the balance. If there are remaining funds, make a final trip to the drug store, dentist, or eye doctor. Keep reading for a year-end FSA reminder and important update.
Sometimes called a flex plan, an FSA is a benefit many companies offer employees. It allows you to direct part of your pay into a special account. Those funds can then be used to pay for childcare or medical expenses. Money that goes into the account avoids both income tax and Social Security tax. However, any money left in the account by the end of the year must be forfeited.
One temporary change to FSA rules, instituted as a stimulus measure during the pandemic, is a grace period that extends the spending deadline for 2021 funds into the year 2022. The catch is your employer must have adopted the extension for it to be in effect. If you have a flex plan, be sure to check with your boss or human relations department to confirm the 2021 deadline.
Did you know? The cost of home testing for COVID-19 is an eligible medical expense that can be paid with FSA funds. Click here for more information at the official IRS website.