Grace Period Extension: Flexible Spending Accounts

The University has adopted the IRS “grace period extension” for Flexible Spending Account claims. In May of this year, the IRS issued a notice permitting employers to modify Flexible Spending Plans, extending the deadline for reimbursement of health and dependent care expenses up to 2½ months after the end of the plan year. Previously, employees were required to "use-or-lose" Flexible Spending Account funds by the end of the calendar year. Under the old rules, any unspent funds at year's end would be forfeited.

Faculty and staff currently enrolled in a Health Care and/or Child/Dependent Care Flexible Spending Account for 2005 will be able to incur eligible medical and dependent care expenses up to March 15, 2006, and still be reimbursed from their 2005 Flexible Spending Account as long as they are employed at Yale on December 31, 2005.

The grace period is being offered to allow claims to be filed against unused balances from the previous year and is intended to help employees avoid losing the money they put into their Health Care or Child/Dependent Care Flexible Spending Account but have not claimed by the end of the calendar year.

Claims for expenses incurred through March 15, 2006 must be sent to the Benefits Office no later than April 30, 2006 to avoid forfeiture of 2005 balances. Eligible expenses incurred during the 2006 grace period that are reimbursed from your 2005 Flexible Spending Account cannot be re-submitted for reimbursement from your 2006 Flexible Spending Account.

Flexible Spending Accounts require annual re-enrollment, and can be elected online during open enrollment by using the Employee Self Service site at http://www.yale.edu/openenrollment, beginning October 31.

Remember, the deadline to enroll in a 2006 Flexible Spending Account is November 20, 2005. This is a change from previous years.