Using Flexible Spending Account (FSA & DCFSA) for Plan Year 2021
March 25, 2022
Typically, if you do not spend your Flexible Spending (FSA) and Dependent Care FSA funds by the end of a calendar year or during the grace period in the first three months of the subsequent year, you lose that money. However, due to pandemic legislation that aimed to help families with their healthcare and childcare costs, the use of FSA and Dependent Care FSA contributions made during 2021 into 2022 is permitted under IRS regulation.
The company has agreed to provide a grace period of up to 12 months following the end of the 2021 plan year to use those funds. This means that FSA and DCFSA contributions made during the 2021 plan year can be used to cover qualifying expenses until December 31, 2022. After the twelve-month grace period, employees will have until January 31, 2023, to submit qualifying expenses for reimbursement from the 2021 contributions.
Keep in mind, these contributions are separate from the contributions you are currently making during the 2022 plan year. It is not anticipated that the twelve-month grace period for the use of 2021 contributions will apply to the 2022 plan year.