For employers who offer medical flexible spending accounts (FSAs) or for those of you who have them, change is in the air: the “Use it or Lose it” policy has been partly done away with for the 2013-2014 non-calendar year.
“The IRS and the Treasury Department have issued new regulations (Notice 2013 -71) that will now allow employees to carry over up to $500 in unused account balances into the following year.”
“The new regulations allow employers to choose either to allow employees to carry over up to $500 into the next year or offer a two and a half month grace period to spend the remaining account funds.”
The hope is that with this change in procedure, more people will participate in an FSA, which allows you to contribute money to the account for costs not covered by insurance: deductibles, copays and coinsurance, and/or use it to pay for health care costs that health insurance doesn’t cover.
Note: FSAs should not be confused with HSAs (health savings accounts), which are tax-advantaged medical savings accounts available to tax payers who are enrolled in an HSA-qualified high-deductible health plan.
For more information on FSAs and HSAs, click here.