Hi:
We recently (January 09) switched to a HDHP with HSA and offered a Limited-Purpose FSA for dental and vision expenses.
An employee elected to contribute $1000 to the Limited-Purpose FSA earlier in the year and is only now realizing what that actually means (i.e. needing to spend $1000 on dental and vision expenses as well as pay for her HDHP expenses). She has been contributing since January 09. She does not anticipate having $1000 worth of dental and vision expenses from now until the end of the calendar year and wants to know if she can end the FSA contributions. As far as I understand the system, because she does not have a change of status, she does not qualify for a termination or change of the FSA.
Are there any other options out there for her to utilize?
Can she pay a penalty or tax and use the FSA funds for other expenses?
Can she roll the funds over to her HSA? We do have a grace period at the end of the plan year. I've tried to do some research on the transfer of funds to an HSA, but see nothing about a Limited-Purpose FSA, only a Medical FSA. I'm also not sure that I fully understand this option in general.
Would she be able to use the funds for retirement (she is over 65)?
I wasn't able to speak with our plan administrator today, but I wanted to answer our employee's question as soon as possible. Any help on this would be greatly appreciated! Thank you!