Treasury, IRS change FSA 'use-or-lose' rule

Nov. 1, 2013 at 6:24 PM

WASHINGTON, Nov. 1 (UPI) -- The U.S. Department of the Treasury and the Internal Revenue Service Friday changed the "use-or-lose" rule for health flexible spending arrangements.

The longstanding rule has been modified to permit employers to allow FSA participants to carry over up to $500 of their unused health balances at the end of the year, the Treasury Department said in a release.

"Across the administration, we are always looking for ways to provide added flexibility and commonsense solutions to how people pay for their healthcare," Secretary Jacob J. Lew said. "Today's announcement is a step forward for hardworking Americans who wisely plan for health care expenses for the coming year."

The change was made after the Treasury Department and the IRS reviewed comments from individuals, employers and others on how to improve their FSAs, the release said. Many comments from the public pointed out that it is often difficult for them to predict future medical needs, as well as a need for FSAs to be more accessible for people of varied incomes.

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