What is FSA?
Flexible Spending Accounts (FSAs) are employer-sponsored accounts that allow employees to set aside pre-tax dollars to pay for qualified medical expenses, including health insurance premiums, deductibles, copayments, and certain over-the-counter medications.
How Does FSA Work?
When you enroll in an FSA, you elect to contribute a certain amount of money from your paycheck on a pre-tax basis. This means that the money you contribute is deducted from your paycheck before taxes are calculated, reducing your taxable income. The money in your FSA can then be used to pay for eligible expenses throughout the year.
What Happens to FSA After Quitting a Job?
When you quit your job, your FSA coverage typically ends on your last day of employment. However, some employers may offer a grace period of up to 90 days after your termination date during which you can still use your FSA funds.
It is important to note that you cannot continue to contribute to your FSA after you leave your job. Any unused funds in your FSA at the end of the grace period will typically be forfeited.
Can Your Former Employer Make You Pay Back FSA Funds?
If you use your FSA funds for ineligible expenses or if you do not use all of your funds by the end of the grace period, your former employer may ask you to repay the funds.
How to Avoid FSA Repayment
To avoid having to repay FSA funds, it is important to:
Only use your FSA funds for eligible expenses.
Keep receipts for all FSA-eligible expenses.
Submit your FSA claims for reimbursement promptly.
Be aware of your FSA grace period and use all of your funds before the end of the grace period.
If you have any questions about your FSA after quitting your job, it is important to contact your former employer or the administrator of your FSA plan.
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