FSA Program Has Grace Period

Toward the end of the year, many federal employees become concerned about losing money in a health care flexible spending account due to the FSA program’s "use or lose" feature. Their reaction in some cases apparently is to attempt to spend down their accounts by making additional reimbursable purchases. In some cases they may not be aware that the program now has a grace period, during which reimbursable expenses may be charged to a plan year, running for 2 ½ months beyond the end of the calendar year. Thus, reimbursable expenses incurred until March 15, 2008 still can be charged against 2007 accounts. The use or lose feature is not as much of a factor in dependent care FSAs because those funds come in and go out on a pay as you go basis, whereas health care account money accumulates if unspent.