Question of the Week

Posted by BAS - 01 October, 2020

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Q.- We sponsor a health flexible spending account plan that runs 7/1 through 6/30. We added a grace period to the 2019 plan year to allow expenses to be incurred through October 15. Can we extend that 2019 plan year grace period again to allow reimbursement of expenses incurred through December 1, 2020?

A.- Yes. The IRS issued guidance allowing Health FSAs and Dependent Care FSAs for the 2019 plan year to either add a new grace period or extend an existing grace period to any date in 2020 to allow claims incurred in 2020 to be reimbursed with remaining 2019 funds. The IRS did not set any specific dates relating to the extension. It is our understanding that plans can set any date they want through December 31, 2020 as the end of the grace period. There are also no prescribed date requirements for submitting claims. All changes will have to be properly communicated to employees and documented for plan purposes.

Topics: Dependent Day Care FSA, Healthcare FSA, Flexible Spending Accounts, HR & Benefit Plans


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