The FSA Grace Period:

The State of Washington has adopted the 2 ½ month grace period for incurring Flexible Spending Account (FSA) claims now allowed by the IRS.  This means that you now have until March 15 of the following calendar year to incur claims against your previous year's FSA money.  The State of Washington adopted this amendment to reduce the chance that a participant in the FSA program will forfeit any funds. 

Only those who have FSA coverage through December 31 can continue to incur claims against the previous plan year for services provided through the following March 15.

All FSA claims for services provided January 1through March 15 of the following calendar year will automatically be processed against the previous year's plan year first if filed by the claims filing deadline for that plan year.  If your claim exceeds the available funds from the previous plan year, any excess will be automatically applied to the new plan year. 

Please note that if you use your FSA debit card to pay for expenses during the FSA grace period (January 1st - March 15th), the purchase will be applied towards your new plan year balance.  FSA debit card purchases during the grace period cannot be used to access funds from the previous plan year.  If you did not re-enroll for the 2010 plan year, your FSA debit card will be shut off on December 31st.

Example 1:  Kristen has $50 remaining in her medical FSA at the end of the 2009 plan year and has no more expenses to submit with dates of service during the actual plan year.  Two weeks after the end of the plan year, Kristen goes to her dentist and incurs a charge of $145.  She submits a claim to ASIFlex.  ASI’s reimbursement software processes the claim and $50 is applied to the remaining balance from the 2009 plan year, and $95 is applied to the 2010 plan year’s balance. 

Example 2:  Kristen submits the claim for her $145 in dental expenses, but, knowing that she has a charge from the hospital for services provided during the past year, but has not received the statement yet, Kristen wants the entire $145 to be applied to the current year. Kristen includes a note with the claim packet asking to apply the entire dollar amount to the new plan year.  ASI’s claim processor applies the entire reimbursement request to the new 2010 plan year. 

The State of Washington's claims filing deadline is March 31 of the following calendar year.  All claims must be postmarked or faxed by this date, or they will not be accepted!

Please note that the grace period does not apply to the DCAP.  The grace period is only applicable for the FSA, or medical reimbursement account.