If you’re putting pre-tax money in accounts to pay for medical bills or dependent care expenses, here are some changes you should be aware of for 2022.
More time to use flexible expense accounts: If you’re worried about losing funds you’ve put aside in a flexible pre-tax health or dependent spending account – maybe because you’ve rescheduled medical appointments or your kids are stayed at home during the pandemic – relax.
Legislation enacted in response to amended COVID-19 rules for ASPs. Instead of losing those funds at the end of the year, employers can change their plans to allow workers to carry over unused funds until 2022.
Normally, your employer may allow you to transfer up to $ 550 of unused funds into a healthcare ASP for an additional 2.5 months (i.e. until March 15 of the following year), and you cannot carry forward a Dependent FSA. funds.
But for 2021, employers can grant a 12-month grace period (until December 31, 2022) for both types of flexible accounts. This is especially important for dependent expense accounts, as Congress has allowed these FSA holders to pocket up to $ 10,500 in pre-tax wages in 2021, up from $ 5,000 against the standard limit. .
If your employer doesn’t provide a grace period, keep in mind that it’s easier to deplete unused funds in a health spending account than to use a dependents’ ASP. You can pay for COVID-19 home test kits, hand sanitizer, and face masks. You can also use FSA funds to purchase over-the-counter medications, such as pain relievers, cough suppressants, and antihistamines.