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Does any IRS guidance prescribe the latest date by which an employee must submit claims for reimbursement of claims for reimbursement under a health care FSA? For 2015, for example, can the plan allow as long as to December 31, 2016 for claims submissions?

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I think it is something like March 31st, but I am not sure. Wouldn't failing to use up the entire account have some sort of impact on the individual taxes due April 15th? If so, how could one submit claims way past then?

By submitting claims, are you restricting it to the submission of claims for 2015 services, or are you looking to submit claims incurred in 2016 to use up any balances remaining from 2015? That might even be permissible, but again, not sure.

Always check with your actuary first!

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I have to disagree with the above responses. The 2 1/2 month grace period is an extension in which a participant must incur a claim, not submit it for reimbursement. There is no maximum or minimum run-out period specified in Code Section 125 or the regulations, as long as the run-out period is administered consistently.

A plan can theoretically have its run-out period end on December 31, 2016, for 2015 claims but that would be unusual given the administrative burden.

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I have to disagree with the above responses. The 2 1/2 month grace period is an extension in which a participant must incur a claim, not submit it for reimbursement. There is no maximum or minimum run-out period specified in Code Section 125 or the regulations, as long as the run-out period is administered consistently.

A plan can theoretically have its run-out period end on December 31, 2016, for 2015 claims but that would be unusual given the administrative burden.

No offense, but I believe this may be incorrect. I am not a FSA expert, so I use the govt sites quite often for these types of questions. I have cut and pasted from Healthcare.gov

FSA limits, grace periods, and carry-overs

You can put up to $2,550 into an FSA each year. You generally must use that money within the plan year. But your employer may offer one of 2 options:

•It can provide a "grace period" of up to 2 ½ extra months to use the money in your FSA.

•It can allow you to carry over up to $500 per year to use in the following year.

Your employer can offer either one of these options but not both. It’s not required to offer either one. Learn more about these FSA options.

At the end of the year or grace period, you lose any money left over in your FSA. So it's important to plan carefully and not put more money in your FSA than you think you'll spend within a year on things like copayments, coinsurance, drugs, and other allowed health care costs.

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For 2016 elections, a participant must incur the expense prior to the end of 2016 (i.e., within the plan year). If the employer has adopted the grace period, the participant has an additional 2 1/2 months (i.e.,, until March 15, 2017) in which to incur the expense and if the employer has adopted the carry over, the employee can incur up to $500 in expenses in the following year (i.e., until December 31, 2017).

Once the plan year or grace period is over, the employee must submit for reimbursement the expenses within the time period set by the employer. Most employers choose somewhere from 30 to 90 days as this run-out period. For instance, if I participate in an FSA with the grace period and a 45-day run-out period and I incur an expense during the grace period (say, early March), I have until the end of April to submit the expense (e.g., fill out a claim form and submit my receipt) for reimbursement.

Make sense?

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