The U.S. Treasury Department and the Internal Revenue Service have announced a significant change to the “Use-it-or-lose-it” rules regarding Flexible Spending Accounts (FSAs).
Here is an overview of the key changes:
- Employers that offer FSAs that don’t include a grace period will have the option of allowing employees to roll over up to $500 of unused funds at the end of this plan year.
- Employers will have a choice of either allowing employees to carryover up to $500 or offering the 2½-month grace period.
- The change is being made to “provide added flexibility and common-sense solutions to how people pay for their health care” and to cut “back on wasteful year-end FSA health care spending by limiting the risk of forfeiture”
We hope that you find this overview helpful as you seek to understand how this rule change may impact your business.
If you have any questions, please contact the CBG Benefits team at 781-759-1222.