FSA – Grace Period vs. Run Out Period

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FSA plan year = 12 month period expenses may be incurred

Grace period = up to an additional 2 ½ month period after the FSA plan year ends when expenses may be incurred, as determined by the plan administrator (i.e. employer)

Run-Out period = time frame after the plan year and/or grace period has ended to submit claims for expenses incurred during the plan year and/or grace period (depending on plan design & determined by plan administrator)

Some plans are set up to have two run-out periods, one that starts at the end of the FSA plan year and a 2nd one that starts at the end of the grace period.

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Not all TPAs systems will accommodate this, rather they only allow the run-out period to start at the end of the FSA plan year. Therefore, if you want employees to have time to submit claims after the grace period ends for expenses incurred during the grace period, you must ensure the run-out period time frame is longer than the grace period.

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