| Detroit Free Press
So you put off dental work or other medical care due to the spread of COVID-19? Maybe you didn’t go out and get a pair of new glasses in December? And you never spent all the money you had last year in your flexible spending account. Or you pulled your little one out of day care and the dependent care dollars you saved look like they’re going to waste? You could be fretting about the old “use it or lose it” rule and fearing that you might lose hundreds or even thousands of dollars that you set aside out of your paychecks before taxes. Now some good news: It is possible that savers might find a new break that would allow them to spend 2020 savings in 2021. The important change is packed into the latest economic relief package passed by Congress last December.And the break could help parents who have unused dollars in dependent care accounts that would have covered day care expenses, too. But there is a catch.Screens in cars: They’re getting even bigger, but is it safe?Tax season 2021: IRS Free File is open for taxpayers”Your employer would have to amend its plan to allow you to carry over amounts from one year to the next,” said Bill Sweetnam, legislative and technical director for the Employers Council on Flexible Compensation. Sweetnam said plan sponsors were very much aware that employees had trouble spending as usual on medical care and dependent care, which includes adult day care, during the pandemic.”If you lose it, it stays with the employer,” Sweetnam said. Money can be used to offset costs of administering the plans, among other things. Still many employers may be reluctant to sit back and see employees unable to spend their own savings. “They don’t like employees to lose money in these plans,” Sweetnam said. “It’s an employee benefit.” What steps can you take? First, it’s important to realize that some current FSA plans already include a grace period that runs until March 15 or so. If so, you might use leftover 2020 money in those accounts if you spend that money soon. Contact your human resources department to understand your plan. Or some employers may allow you to carryover $500 of unused money — going up to $550 in 2021 — into the following year. Employers either offer that grace period or a carryover, not both. Some plans do not offer any of those options. What happened under the COVID-19 relief law? Under the new COVID-19 economic relief package, signed by the president Dec. 27, an employer is allowed to adopt additional extensions for carryover and grace periods. Last year’s leftover cash, for example, now could rollover into 2021, thanks to provisions in the Consolidated Appropriations Act, 2021.And money left over from savings in 2021 could roll over into 2022. And you could use dependent care dollars for someone who has not yet turned age 14.The old rules required that FSA money could not be used to pay for the care expenses of dependent children who turned 13.To be eligible, the employee must have been enrolled in a dependent care FSA for a plan year with an enrollment period ending before Jan. 31, 2020. But, again, this deal only works if your employer takes action and adopts the additional extensions for carryover and grace periods. Consumers should first determine how their current FSA plans work when it comes to carrying money into the next year or any grace period to file a claim, according to Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.And then, you need to know if your employer plans to adopt the additional breaks allowed most recently by Congress. “If they know they still have unused amounts from their 2020 FSA, they should not go on a spending spree until they know the periods that their particular employer’s plan permits,” Luscombe said. An FSA allows you to pay for many out-of-pocket, qualified medical expenses with pretax dollars. If you save $2,000 out of your paycheck into an FSA, for example, you’re not paying payroll taxes or income taxes on those earnings. More good news: You now are able to buy over-the-counter medications without a prescription, such as pain relievers or allergy relief medications, and use FSA money to cover those costs, thanks to changes in the Coronavirus Aid, Relief and Economic Security Act passed by Congress last March. The maximum that you can contribute to a health Flexible Savings Account is $2,750. Employers either offer that grace period or a carryover, not both. Check with your plan. The maximum that you can contribute to a dependent care FSA is $5,000.The FSA is offered by employers who offer health insurance coverage to employees. You cannot use FSA dollars to pay for the out-of-pocket health insurance premiums that you pay. If you didn’t use all the money, savers should check their options – and avoid dragging out any spending.”Even when they know the deadlines under their employer’s FSA plans,” Luscombe said, “they should still not wait until the last minute to incur the expenses. Especially during COVID, it might be difficult to get an immediate appointment for some items of expense, so they should leave plenty of cushion in case there are delays.” Contact Susan Tompor via email@example.com. Follow her on Twitter @tompor. To subscribe, please go to freep.com/specialoffer. Read more on business and sign up for our business newsletter.