New Carryover Option for Health Flexible Spending Arrangements

December 2013

Recent guidance from the IRS modifies the long-standing "use or lose it" rule under a health flexible spending arrangement ("Health FSA") to permit such arrangements to offer participants the opportunity to carryover up to $500 in unused Health FSA benefits for a plan year to the following plan year for reimbursement of medical care expenses incurred in such subsequent year. This new Health FSA carryover option is intended to provide participants with greater flexibility in using their Health FSA balance remaining at the end of a plan year and thereby avoid possibly unnecessary year-end Health FSA spending to prevent unused amounts from being forfeited to their employer.

To continue reading about the Health FSA "use it or lose it" rule, please click here.