This option comes on the heels of the Internal Revenue Service (IRS) notice in May allowing employers to offer extensions that would give employees additional time to incur expenses that draw down funds in their prior-year FSA, according to a news release. For example, a worker on a calendar year plan could have until March 15, 2006, to incur claims that draw down monies set aside in their FSA during 2005.
Employers can choose a grace period from one month, one month and 15 days, two months or two months and 15 days for Great-West Healthcare health and dependent care FSAs. Extensions may be added to FSAs beginning with the 2005 plan year, so calendar-year FSA plans have until December 31, 2005, to amend their plans.
Great-West Healthcare also will give employers the option to extend the “run-out period” – the period during which employees may submit qualified expenses for reimbursement – to 120 days after the end of the plan year.
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