Flexible Spending Accounts get more flexible
Use it or lose it? Maybe not.
Yesterday, the U.S. Treasury and IRS modified the "Use It or Lose It" rule that could go into effect as early as plan year 2013. Millions of Americans rely on the pre-tax FSA to save on out-of-pocket FSA eligible expenses.
What does the modified rule mean for flexible spending accounts?
An employer could:
- Allow for a carryover of up to $500 of unused FSA funds to the following year. However, the option to give a carryover is up to the employer, and they must change FSA plan documentation to allow for the carryover.
- Continue offering a grace period instead – an FSA cannot have both the carryover and a grace period.
- In some instances, employers may opt to not offer either a carryover or a grace period at all, though this is rare.
- Following the Uniform Coverage rule, FSA funds will remain available to starting on the very first day of the FSA plan year.
“Across the administration, we are always looking for ways to provide added flexibility and commonsense solutions to how people pay for their healthcare,” commented Secretary Jacob J. Lew.
At FSAstore.com, we support any measures that would promote FSA growth and those that help FSA participants and our customers.
"The changes to the 'Use it or Lose It' rule promote positive growth for Flexible Spending Accounts. Right now is an important time of the year as it is open enrollment season, which allows employees to opt into an FSA. The 'Use it or Lose it' provision is one of the reasons why many people shy away from FSAs, but FSAs offer major pre-tax savings on out-of-pocket expenses," said FSAstore.com Founder and President, Jeremy Miller. "On our site, we sell FSA eligible medical products that people need every day, not just the end of the year when deadlines approach, such as first aid supplies, blood pressure monitors and breast pumps. We support continued FSA growth for the millions of American families who rely on these plans and are hopeful that the changes should boost FSA enrollment significantly."
We recently launched a new FSA Tracker, so that our customers don't have to miss their FSA deadlines. Check out other resources such as our FSA Learning Center for answers to FSA-related questions, FSA Services to find eligible health care providers, the FSA Eligibility List to browse eligible products and an FSA Calculator to estimate expenses during this year’s open enrollment. If you need spend down your FSA, shop for thousands of FSA eligible products and bundles!