A word of caution: Federal regulations require that you use the entire amount in your HCFSA account by the end of each Plan Year (December 31st) or Grace Period (March 15th). If you do not use the entire amount you allocate to your account, you forfeit the unused balance. This is referred to as the "Use or Lose" rule.

Before participating in HCFSA, you should carefully consider what your eligible expenses might be. Reviewing your expenses from previous years can help. Once you have estimated the amount of your expenses, you may then determine how much to contribute to HCFSA.

Under federal law, any money that you put into an HCFSA must be used for expenses incurred during the Plan Year or Grace Period in which it was contributed. A Claims Run-Out Period is provided, following the close of the Grace Period, to submit claims for services performed during the previous Plan Year or Grace Period.

You may submit any claims incurred during the Plan Year in which you were a participant in HCFSA as follows:

2010 Grace Period: January 1 - March 15, 2011
2010 Claims Run-Out Period: March 16 - May 31, 2011
2010 Claims Deadline: May 31, 2011

If you overestimate your expenses and contribute more than your actual expenses, or if you do not submit approved claims equaling in total your annual allocation prior to the end of the Claims Run-Out Period, you will permanently forfeit any unused amounts remaining in your FSA account.

Note: If you participate in both HCFSA and DeCAP, the amount you allocate to one account cannot be transferred to the other.

Read the Flexible Spending FAQ