FSA Balance: What Happens When You Quit Your Job?

Flexible Spending Accounts (FSAs) are a popular way to save money on healthcare expenses. They allow you to contribute pre-tax dollars from your paycheck to an account that can be used to pay for qualified medical expenses. But what happens to your FSA balance if you quit your job?

Understanding FSA Funding

Contrary to popular belief, FSA balances are not funded entirely by your paycheck contributions. Rather, they are initially funded with the full amount you enroll for at the beginning of the year. This amount is then reimbursed to you through regular deductions from your paycheck throughout the year.

Accessing Your FSA Balance After Quitting

When you quit your job, you have a limited window of time to access your FSA balance. You can typically reimburse yourself for qualified expenses incurred during the same plan year, even if payment is made after your last date of employment.

However, it’s important to note that FSA eligibility is tied to your enrollment in the plan. When you leave the job offering that plan, your eligibility to receive reimbursement may end. There may be a short extension past your final day to submit paperwork for qualified expenses, but this is usually limited to a few weeks.

Using Your FSA Balance

To use your FSA balance after quitting your job, you’ll need to:

Check your remaining balance: Determine how much money you have left in your FSA account from the previous plan year.
Review eligible expenses: Make sure that the expenses you intend to reimburse are qualified under your FSA plan.
Submit paperwork: Contact your former employer or FSA provider to request reimbursement. You may be required to submit documentation for the expenses you are claiming.

Time Limits and Exceptions

In general, you have until the end of the following plan year to use your FSA balance. However, there may be exceptions for certain situations, such as:

Death or disability: If you become disabled or die, your remaining FSA balance may be distributed to your beneficiaries.
Plan termination: If your FSA plan is terminated, you may have a limited time to use your balance before it is forfeited.

Seeking Professional Help

Navigating the FSA rules and regulations can be complex. If you have any questions or concerns about accessing your FSA balance after quitting your job, it’s advisable to seek the assistance of a licensed agent who specializes in health insurance. They can help you understand your options and ensure that you use your FSA funds appropriately.