Updated: January 13, 2020 10:07 AM
Created: January 13, 2020 08:03 AM
ROCHESTER, N.Y. (WHEC) — Some of you may be starting the year off a few hundred dollars short of what you expected to have right now, and you may have not even realized you were losing money.
This has to do with your health insurance.
News10NBC’s Brennan Somers was asked about it for this week's Good Question.
There are a lot of people simply throwing away money. In many cases, it’s probably by mistake because they forgot it's even there.
The story is focused on all the dollars you put away in flexible spending accounts (FSAs).
There's a certain amount you have to spend by the end of each year. One viewer named Frank wanted to know, “If I don't spend the money where does it go?”
We took that question to Jim Schnell, the head of the tax department at Mengel Metzger Barr in Rochester. He knows a lot about the two tax-advantaged savings accounts we can use through insurance — health savings accounts and flexible spending accounts; better known as HSAs and FSAs.
Employees can use these spending accounts to pay for certain medical expenses, doctor's visits, and medications with pretax funds.
The amount you can put away is capped each year. If you're using an FSA, remember this motto: "Use it or lose it.”
You have to spend the money by a certain date, usually Dec. 31 each year, or it's gone. But in some cases, there's a bit of leeway.
“Used to be called do use it or lose it rules for FSAs, and they're still very much in place,” Schnell added. “They were relaxed a couple of years ago, and up to $500 in an FSA unused could be rolled forward, the other funds are forfeited back to the plant assets.”
Yep, that's right. Don't use your money, and what's in the FSA goes back to your company.
Now don't think your bosses are making a profit off your leftover money. The money you lose to the plan is used to cover its expenses, said Kristen Appleman, vice president of health and wealth at ADP TotalSource.
There are pros and cons to both. For example, HSAs come with high deductible plans.
One more note on FSAs — employers have two options.
The IRS gives employers the option of allowing workers to roll over $500 into the following year or giving them up to March 15 of the new year to use the money.
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