If you and your coworkers have been frantically working to spend the money set aside in your flexible spending accounts before year end, step away from the bumper box of bandaids because the rules on carry overs have changed in your favor!
Earlier this month, the US Department of Treasury announced that it would be relaxing its “use-or-lose” policy for the accounts and employers will now be able to allow FSA participants to carry over up to $500 in unused funds into the next year.
The change comes in response to individual and employer complaints that it’s hard to predict future medical needs and that the “use-or-lose” rule encourages unnecessary spending on medical services and items at the end of the year.
According to the treasury department, most forfeited amounts are currently less than $500. Sources speculate that the more relaxed carry-over rules may encourage other workers to use the accounts, which financial planners say are a good way to manage out-of-pocket medical costs. Currently, an estimated 14 million families already participate in health FSAs.
“We are always looking for ways to provide added flexibility and commonsense solutions to how people pay for their healthcare,” Treasury Secretary Jacob Lew said in response to the changes.