I heard that if you claim a reimbursement from your flex account for medical expenses, it should be paid even if there is not currently enough in your account, as long as there will eventually be enough money to cover it based on future contributions for the year. Is that correct?
Yes, that's right. As long as your current flex plan balance and what you are expected to put in through the end of the plan year are greater than what you're taking out, you should be okay.
For example, say you plan to contribute $3,000 to the account over the course of the plan year. You'll be able to use the full $3,000 the first month, even though you've only contributed $250.
And if you lose or leave your job a month or two later, you do not need to pay the money back. This is one reason why many employers cap flexible-spending account contributions at $2,000 to 3,000 for the year.
On the flip side, though, you can't change your contribution level in the middle of the year unless you have a change in family status -- you get married, have a child or get divorced. And you'll lose any money in the account that you haven't spent by the end of the plan year.
Now would be a good time to check your account balance. Even if you cannot spend all of the money, you may still come out ahead, thanks to the tax benefits.
And as you're planning for next year's flexible-spending account contribution, keep in mind that many health plans are increasing their co-payments, deductibles and out-of-pocket costs for prescription drugs -- all of which can be paid with pre-tax money from your flexible-spending account.
GETTING STARTED
