Limitations to the Flexible Spending Accounts

Reimbursement accounts have some limitations. These limitations are based on federal regulations required because of the tax-exempt feature of the accounts. For example:

  • You must re-enroll in the accounts during each annual open enrollment period through Employee Self Service at BUworks Central . If you do not complete a new enrollment, your participation in the accounts will cease at the end of the plan year, and you will not be able to enroll again until the next open enrollment period (unless there is a life or career event).
  • Flexible spending accounts can be used only for the purposes for which they are set up—that is, dependent care expenses or health care expenses, respectively.
  • Your decisions regarding how much money you will contribute to the accounts for the plan year are fixed (unless there is a life or career event). You cannot choose to stop, reduce, or increase your contributions during the year.
  • If the full values of the accounts are not used up during the year, you forfeit the remaining balances.

Because of the requirement to forfeit any unused account balances, reimbursement accounts should be used only for predictable expenses. You should, therefore, estimate conservatively.

Treatment of Year-End Expenses

You have until the March 31 following the end of a given plan year to submit claims for reimbursement of expenses incurred during that plan year. Account balances remaining after that date will, by law, be forfeited. You may not use current plan year account balances to pay for expenses incurred in a prior plan year. Prior plan year expenses must be paid with prior plan year account balances. Also, unused amounts cannot be carried over and used to reimburse expenses incurred in a later year.

Use of Forfeitures

Forfeited account balances will remain part of the University’s assets. Under no circumstances may any forfeiture be used to directly benefit any individual plan participant.