Q. Our Health FSA has a 2-1/2 month grace period for incurring claims after the end of the plan year. We have an employee who is participating in the Health FSA in 2014, but does not want to participate in 2015. Will the grace period still be available to him to incur claims for reimbursement?
A.- Yes. The grace period applies to any participant receiving coverage under the FSA on the last day of the plan year. An FSA cannot limit a grace period to only those individuals who elect coverage in the following plan year. Even a participant who terminates employment during the grace period remains entitled to the grace period for the full duration.