Risk of Forfeitures Bears Watching

Although it has been disclosed since last fall when the FSA program was first announced that money left in an account at the end of a plan year is forfeited and cannot be rolled over into the following year, that provision apparently is coming as surprise and a shock to some employees considering enrolling in the program. Experts say one approach employees might follow would be to designate only enough money to cover regular and predictable expenses so that they’re not faced with a forfeiture. While dependent care costs typically are regular and predictable, health care costs typically aren’t, except for example for co-payments for maintenance drugs and similar repeating health expenses. They also note that some employees may choose to join for a year in which they expect to have a one-time major expense not covered by health insurance, such as certain dental procedures, and then drop out for the following year. In any case, the minimum investment in either type of account is $250 per plan year.