New Rules for Health Flexible Spending Accounts

Many Flex Plans have a "use it or lose it" rule which requires employees to spend the money in their account by the end of the year or they will lose it.  Some plans already have a "grace" period which allows carryover of unused monies for 2 1/2 months into the next year.  The IRS recently issued a new notice that permits employers to allow employees to carryover up to $500 for expenses in the next year.  A Health FSA cannot have both the $500 carryover and the grace period, so be sure to check with your employer to see which option they offer.

With deductibles resetting as of January 1st, some pre-planning can help you minimize your out of pocket medical costs.  If your deductible for 2013 is already met, be sure to schedule any needed medical treatment now.  Also, check your Health FSA balance to determine if you want to use the dollars in 2013 or if you want to carryover some money to 2014 to help meet new deductibles.  This new rule is helpful because it allows employees to save their FSA dollars for needed medical treatment rather than stocking up on items like eyeglasses at the end of the year so as not to lose their money.