The U.S. Department of the Treasury and the IRS Thursday issued a notice modifying the longstanding use-or-lose rule for health flexible spending arrangements. Participants now can carry over up to $500 of their unused FSA balances remaining at the end of a plan year.
The rule will go into effect in plan year 2014.
Effective immediately, employers that offer FSA programs that do not include a grace period will have the option of allowing employees to roll over up to $500 of unused funds at the end of the current 2013 plan year.
For nearly 30 years, employees eligible for FSAs have been subject to the use-it-or-lose-it rule, meaning that any account balances remaining unused at the end of the year are forfeited.