Some people are finding their flexible spending accounts are anything but flexible during the COVID-19 pandemic.
The money in their accounts is just sitting there, and that could be a problem.
In a normal year, our January through early June aftercare would be about $900, she said.
Russ Kohl, Claire Kohl and Melissa Vernon are pictured here. “In a normal year, our January through early June aftercare would be about $900,” Melissa Vernon said. “We only incurred $378 this year.” Vernon was able to use her flexible spending account to pay for a few small summer camps and the first few months of aftercare, but she is left with a significant amount of money she cannot spend. Photo courtesy of Melissa Vernon
We only incurred $378 this year.
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What is a Flexible Spending Account?
They are sometimes called cafeteria plans.
Employers take money out of paychecks before taxes to fund the accounts, which are regulated by the IRS.
A third party usually administers the accounts and handles reimbursements.
There is one major difference in how the two types of accounts are reimbursed.
Basically, your company is fronting the money and relying on you to pay it back over the year.
For a DCFSA, you cannot use the money until you have put it in your account.
What Has Happened in 2020?
Schools closed, before- and after-school programs shut down and summer camps were canceled.
Many parents began working from home or lost jobs and no longer needed child care.
Were seeing some employers allowing their employees to make changes.
Some employers may allow other changes.
While that may help employees, it could put a burden on employers.
Laguna received an email from her employer telling her she could make changes to her contributions to her DCFSA.
There is no such allowance to carryover money for DCFSAs.
Again, that is an allowed benefit, not a guaranteed one.
What Can You Do About Your FSA?
So what can you do if you still have some extra money in your FSA?
There is still time to spend down HCFSA money.
Stock up on eligible supplies.
Get a new pair of glasses or stock up on contact lenses.
But it is not possible to have both a carryover of funds AND a grace period.
Its either one or the other.
Companies still have time to allow a change to both HCFSAs and DCFSAs.
Pringle suggests reaching out to your companys HR department.
Share your feedback about how the change in legislation would help (you) specifically, she said.
In general, (employers) are thinking of how they can help their employees through the pandemic.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
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