As the calendar year winds down, many employees have flexible spending account (FSA) funds that need to be used or forfeited, depending on the plan’s specific rules. For employers, November and December are a good window to remind employees about these deadlines so unused benefits dollars don’t go to waste.
How FSA Deadlines Typically Work
Flexible spending accounts are generally subject to a “use-it-or-lose-it” rule, meaning funds not used by the end of the plan year may be forfeited. However, many plans include one of two exceptions: a grace period of up to two and a half months into the new year to use remaining funds, or a limited carryover amount that can roll into the following year. A plan can offer one of these exceptions, but generally not both, and some plans offer neither, so it’s worth confirming which rule applies to your specific plan.
Why Employees Often Miss This Deadline
Many employees simply forget how much they’ve contributed to their FSA, or they aren’t aware of their plan’s specific deadline and whether a grace period or carryover applies. Because FSA elections are typically made once a year during open enrollment, months can pass without an employee thinking about their remaining balance until it’s too late to use it.
Practical Reminders Employers Can Send
A short, clear communication in November or early December can make a meaningful difference. Consider including:
- The specific deadline for using FSA funds under your plan, including any grace period or carryover amount.
- A reminder of what qualifies as an eligible expense under the FSA.
- Instructions for how to check a current account balance.
- A note encouraging employees to schedule any needed appointments, such as dental work, vision exams, or elective procedures, before the deadline.
Common Eligible Expenses Worth Highlighting
Employees may not realize the range of expenses that typically qualify under a health FSA, including copays, prescription costs, certain over-the-counter items, dental and vision care, and some medical equipment. Reminding employees of this list can help them find ways to use remaining funds on care they may already need.
Coordinating With Open Enrollment
Year-end FSA reminders often overlap with open enrollment season, when employees are also deciding how much to contribute for the coming year. This can be a useful opportunity to remind employees to base their next FSA election on realistic anticipated expenses, since overestimating contributions is one of the more common reasons funds go unused.
Supporting Employees Through Clear Communication
Ultimately, an FSA is only valuable to an employee if they understand how it works and take action before the deadline. A clear, well-timed reminder is a simple way employers can help employees get the full value out of a benefit they’re already paying into.
Timing Reminders for Maximum Impact
Sending a single reminder in early November may not be enough, particularly since medical and dental appointments often book up quickly during the holiday season. Consider sending an initial reminder in early November, with a follow-up in early December for any employees who haven’t yet used their remaining balance, so there’s still time to schedule care before the deadline arrives.
Reviewing Your Benefits Communication Strategy
If your organization offers an FSA, year-end is a good time to evaluate whether your current communication approach is giving employees enough notice and clarity about their deadlines. A small adjustment to your messaging now could mean fewer forfeited dollars for your employees next year.
Associated Insurance Services can help you review your group benefits package and how it’s communicated to employees. Contact us at (208) 336-7733 or request a consultation online.
