When do my Health Care FSA funds become available?

The full annual contribution amount for a Health Care FSA is preloaded and immediately available for use at the beginning of the plan year. Employees pay back the funds incrementally through paycheck deductions for the rest of the plan year.

FSAs have a 90-day run-out period at end of the year in which employees can submit claims for expenses previously incurred during the year. For example, if the plan year ends on December 31, employees will have until March 31 to submit receipts for expenses incurred before December 31.

FSA funds are not prorated based on hire date. All employees receive the full annual amount on their account's effective date

Preloading presents risks and rewards for the employer:

  • Employees can use the entire amount before they've paid it back through deductions. The company cannot recover the funds if the employee is terminated before the balance is repaid.
  • Any unused money remaining in the FSA at the end of the plan year is returned to the employer. If an employee is terminated before all funds are spent, the remaining funds are returned to the employer.

Employers may optionally offer:

  • A two and a half month extension after the end of the plan year during which any remaining Health Care FSA funds can be spent (grace period, separate from the run-out period), or
  • The ability to roll over up to $500 of unused Health Care FSA funds into the next plan year.

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