Maximizing Your Employee Benefits Before Year-End
As the end of the year approaches, employees have a valuable opportunity to review their employer-sponsored benefits and make sure they are getting the most out of them. Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), and COBRA Continuation coverage each have unique rules and deadlines. If you don’t take action before the year closes, you could lose money, miss out on tax advantages, or forfeit coverage you need. The good news: with a little planning, you can maximize these benefits and enter the new year financially prepared.
Flexible Spending Accounts (FSAs)
FSAs are one of the most important benefits to review before December 31 because many plans follow the “use it or lose it” rule. This means any funds left unused could be forfeited. Some employers offer a small carryover or grace period, but those rules vary, so be sure to confirm the specifics of your plan. To use up remaining balances, consider scheduling dental or vision appointments, refilling prescriptions, or purchasing eligible over-the-counter items you know you’ll use in the coming months. Just as important: make sure you submit all outstanding claims before your plan’s deadline. Missing the submission window is a common mistake that prevents employees from being reimbursed for valid expenses.
Health Savings Accounts (HSAs)
Unlike FSAs, your HSA funds roll over from year to year, making them a powerful long-term savings tool. Still, it pays to maximize contributions before year-end. Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses. If you’re covered under a High Deductible Health Plan, check whether you’re on track to hit the IRS contribution limit, and consider making an additional contribution before December 31 if you have room. If your HSA balance is large enough, you may also be able to invest the funds, giving your account the potential to grow like a retirement plan while still providing flexibility for medical expenses.
Health Reimbursement Arrangements (HRAs)
HRAs are funded entirely by your employer and can vary widely in structure. Some plans allow unused funds to roll over, while others require you to spend the money within the plan year. Review your balance and any deadlines for incurring or submitting expenses. This is also a good time to check that you’ve submitted all required documentation, as many HRAs require proof of eligible expenses before reimbursing you. If you’ve been putting off a medical, dental, or vision expense that qualifies under your plan, consider scheduling it now so you don’t miss out on employer-funded dollars.
COBRA Coverage
If you’re currently enrolled in COBRA, year-end is a critical time to double-check your obligations. COBRA allows you to continue health coverage after a qualifying event, but coverage ends if premiums aren’t paid on time. Review your deadlines carefully and make sure you’ve budgeted for upcoming payments. If you’re considering COBRA for the first time, weigh the cost of continuing coverage against other options, such as enrolling in a spouse’s plan or shopping on the health insurance marketplace. Since COBRA can be expensive, a quick review could save you significant money heading into the new year. Qualified beneficiaries on COBRA have the same right to open enrollment as active employees, and it’s important to understand that if plans or rates change, a new election must be made to continue coverage under COBRA.
Avoiding Common Pitfalls
The biggest mistake employees make is waiting until the last minute and missing important deadlines. For FSAs and HRAs, it’s crucial to know the difference between “incurred” and “submitted” dates – expenses often must be incurred before December 31, even if you can submit the claim later. Another common mistake is assuming all expenses are eligible; not every over-the-counter product qualifies, and plans differ in what they cover. Finally, don’t overlook substantiation requirements: if your benefits card purchase required a receipt and you never submitted it, your claim could remain unpaid until you do.
Taking Action Now
A simple year-end benefits check can ensure you make the most of the money you’ve set aside. Start by reviewing your account balances and plan rules, then schedule appointments or order eligible items to use up remaining funds. Submit any outstanding claims with the proper documentation, and confirm whether you’re contributing enough to your HSA to maximize tax advantages. If you’re enrolled in COBRA, double-check your premium due dates to avoid a lapse in coverage. Finally, use what you learn this year to plan smarter for next year, adjusting your elections based on your actual expenses.
Final Thoughts
Employer-sponsored benefits are designed to support your health and your finances—but only if you use them strategically. By taking a few hours now to review your FSA, HSA, HRA, and COBRA coverage, you can save money, reduce stress, and avoid forfeiting hard-earned benefits. Don’t wait until the last day of December. A proactive approach today will set you up for a smoother, more financially secure new year.
