End of FSA ‘use-it-or-lose-it’ era coming soon?
There are a number of reasons for employees to be optimistic that they’ll longer have to forfeit leftover FSA funds at the end of the plan year or grace period.
First, the House Ways and Means Committee recently passed the Medical FSA Improvement Act of 2011 by a 23-6 vote.
The bill would amend the “use-it-lose-it” rule that currently governs flex spending accounts and allows employees to take out up to $500 in taxable cash at the end of the plan year or the plan’s grace period. The withdrawal would need to be made within seven months of the end of the plan year.
But even if this legislation doesn’t go into effect, there’s still hope for an end to the unpopular FSA rule. IRS said it would consider “modifying” the use-it-or-lose-it rule.
Why is IRS suddenly considering a change to a rule that’s been in place for 28 years? The healthcare reform law’s $2,500 limit on FSA contributions, which starts in 2013, would hamper workers’ ability to set aside large amounts of money into an FSA.
- Share on
Free Training & Resources
Webinars
Provided by Yooz
White Papers
Provided by Anaplan
Further Reading
There’s a Great Re-evaluation going on among your peers when it comes to health and well-being program benefits. That’s t...
Some of your year-end health plan responsibilities have lifted, thanks to eleventh-hour legislation from Congress. Plan sponsors that me...
Financial wellness programs often sound expensive or complex, but the truth is that one simple step — helping employees better unders...
EBSA FY 2025 Enforcement Snapshot $1.4B recovered for workers and plans 878 civil investigations closed 253 criminal investigatio...
With benefits costs climbing and new laws like SECURE 2.0 adding complexity, viewing employee benefits as a simple fixed cost is an outdate...
The IRS has announced updated health savings account (HSA) contribution limits and high-deductible health plan (HDHP) parameters for 2026, ...
