Following a recent notice posted by the U.S. Department of Treasury and the IRS employers may not allow employees to roll over up to $500.00 of the unused amounts of money remaining in their health FSAs for use during the next plan year.
The new options offered to employers who offer health FSAs are as follow: 1. Keep their “use-or-lose” policy; 2. Offer a specified “grace period” for their employees to submit medical claims after the plan year has ended with 75 days being a maximum; or 3. Roll over up to $500.00 of the employee’s unused funds for the use during the next plan year. If employers choose to allow the roll over they cannot combine this with a grace period.
Due to the old “use-or-lose” policy some employees would not participate in the FSA, as they were worried they might miscalculate their expenses and lose the balance of their funds left in the FSA account. The new rule, however, enables many more to benefit from participating in the health FSA plan. Similarly, the ASI expects tis change to reduce resulting forfeitures.
If you are currently offering a health FSA to employees and would like to offer the roll over option ASI will be happy to make this change to your plan. FSA election forms will be available in assisting your to implement this change.
If you aren’t currently offering an FSA plan to your employees but find you are interested in learning more about Flexible Spending Arrangements, contact our office at flexhelp@asibenefits.com to discuss how you and your employees can benefit from this plan.