Run out and grace periods are important timing features in pre-tax benefit plans that give employees additional flexibility with their funds. 

A run out period gives you additional time to submit claims for expenses incurred during the eligible spending window, while a grace period extends the eligible spending window beyond the end of the plan year.

How it works

Pre-tax benefits like FSAs typically follow a "use-it-or-lose-it" rule, meaning funds must be used within the plan year or they're forfeited. To create more flexibility, employers can offer two different types of period extensions:

Run Out Period

A run out period allows you to submit claims for reimbursement after the plan year ends. It covers expenses that were incurred during the original eligible spending window, so no new expenses can be incurred during this time. Run out periods are typically 30, 60, or 90 days.

Run out periods do not change your eligible spending window. During a run out, card spending is disabled but you may submit for reimbursements against your remaining balance.

Grace Period

A grace period extends the time during which you can incur new eligible expenses after the end of your plan year. They allow you to use remaining funds from the previous plan year on new expenses. Grace periods can be a maximum of 2 months and 15 days after the end of the plan year.

Grace periods give you a longer eligible spending window. Card spending remains active during grace periods.

What is my benefit configured with?

To find out whether your pre-tax benefit is configured with a run out or grace period, you'll navigate to your benefit and review your eligible spending window and/or your run out period, if configured.

The Health FSA shown above has been configured with a run out period, from January 1 to March 31st, 2026. During this period, you are able to submit for eligible expenses that were incurred during the eligible spending window (Jan 1 - Dec 31, 2025), but new card spending under this benefit will not be allowed. 

The Dependent Care FSA shown above has been configured with a grace period, extending the eligible spending window from January 1st, 2025 to March 15th, 2026.

How to navigate run out and grace periods

During a run out period:

1. Log in to your Benepass account (if terminated, you'll use your backup email)
2. Navigate to the submit expense function
3. Ensure any submitted expenses were incurred during your eligible coverage period
4. Include clear date information on your receipts to avoid processing delays
5. Submit all eligible expenses before the run out period ends to avoid forfeiting funds

If you have a previous year's FSA in a run out period, as well as a new FSA, keep in mind that any card transactions will be drawn from the new FSAs funds, as card spending is not eligible during a run out.

If you are attempting to pay an eligible expense that was incurred during the prior plan year, please use a personal card and submit the receipt and invoice to your FSA in run out for reimbursement.

During a grace period:

1. Continue using your Benepass card for new eligible expenses
2. You can submit both new expenses and expenses from the previous plan year
3. Be aware of when your grace period ends to avoid unexpected declines
4. Track your spending to use remaining funds before they expire