“Use it or lose it.” If you enrolled in a medical Flexible Spending Account (FSA) prior to November 2013, this phrase summed up the longstanding rule that if you don’t use the funds you elected by the end of the year, you lose them.
Fortunately, a modification of this rule was announced on October 31, 2013. The change allows employers to adopt a rollover rule in which medical FSA participants can carry over up to $500 of their unused health FSA funds into the next plan year. A FSA is an account consisting of tax-free funds that you contribute to on an annual basis which helps you pay for certain out-of-pocket health care costs.
According to Alegeus Technologies, the employers who actively promoted the FSA rollover allowance are seeing 11 percent incremental growth in FSA enrollment and 9 percent growth in FSA elections – compared to a flat overall FSA market growth. Of the enrollment data they explored, only 8% of their employer groups adopted the $500 rollover rule for 2014, mainly because the timing of the rule modification which prohibited administrators and employers from adopting the new rule.
The $500 rollover rule creates a greater value proposition for employees considering FSA enrollment. The ability to keep up to $500 of unused funds eases the concerns many eligible employees face when determining how much to put in their account.
For more information on implementing a FSA, contact Austin Benefits Group today at 248-594-5550.
Mayer, Katheryn. “FSA rule change drives double-digit growth.” Benefits Pro. 18 September 2014. Web. 22 September 2014. < http://www.benefitspro.com/2014/09/18/fsa-rule-change-drives-double-digit-growth?eNL=541b3fae160ba046638b4650&utm_source=BenefitsProDaily&utm_medium=eNL&utm_campaign=BenefitsPro_eNLs&_LID=169973729>.