Here’s a little tip about your flexible spending account (FSA) that most employers don’t want you to know about. (I know none of mind ever did!)
If you sign up to contribute money to an FSA account for the year, your full FSA funds must be available to you even if you haven’t contributed your full amount yet. That full amount must be available even if you never contribute the full amount, for example, because you quit or are laid off.
Okay, what does that mean?
It means that say you sign up to contribute $1,000 over the course of the year to your FSA account. If it turns out that you will need dental surgery in January that will cost $1,000, you are entitled use that full $1,000 in January, even if you have only contributed less than $100 at the time. If you are laid off or quit the day after you have your dental work done, you can still be reimbursed the full amount from your FSA even though your contributions will not cover the full amount.
On the flip side, in contributing to an FSA, you always take the risk that you will not use the full amount of your FSA before the end of the year. As most people know, if you don’t use the full amount of your FSA by the end of the year, you lose whatever balance you have left in your FSA.
Bottom Line: If you think you will be laid off (or are going to change jobs), try to use as much of your FSA as you can while you can. It’s your money, so use it!
Remember FSA money is good for medical, dental, and vision expenses, as well as prescription drugs and most over-the-counter medication, so don’t be afraid to stock up on eligible expenses such as aspirin or saline solution.
Do you have an FSA? Tell us about it in our discussion forum!