Great news for healthcare flexible spending account plan participants! If you have nightmares of falling prey to the "use-it-or-lose-it" provision in your flexible spending account and potentially losing some of your hard earned money, fear no more.
Effective immediately, your employer can opt to allow up to $500 of unused amounts remaining in your health care flexible spending account at the end of a plan year to be rolled over to be used in the following plan year provided the plan does not contain the grace period provision.
Employers will now be faced with the three options for their plans regarding funds remaining at the end of a plan year. They are:
- The "use-it-or-lose-it" provision - funds remaining unused in an employee's account at the end of a plan year are forfeited by the employee and revert to the employer
- Allow a 2 1/2 month run out grace period, or
- Allow up to $500 of unused funds to roll over into the next plan year
Be sure to check with your Human Resources or Benefits Department to see if your employer will be making any changes to your plan.
Employers must amend their plan document and provide applicable notification to plan participants for any change(s) adopted by a plan.
The maximum contribution permitted for the health care flexible spending accounts for 2014 remains at $2,500.
More information can be located in RS Notice 2013-71.