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IRS Allows $500 Carry-Over Total for FSAs IRS Allows $500 Carry-Over Total for FSAs

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IRS Allows $500 Carry-Over Total for FSAs

The new regulation changes an old use-it-or-lose-it rule.

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On Thursday, Treasury Secretary Jacob Lew called the rule change a "commonsense solution" to the way Americans pay for their health care.(Chet Susslin)

The Internal Revenue Service has announced a change to the rules governing flexible-spending arrangements to allow consumers to roll over up to $500 each year.

FSAs are health care spending accounts where consumers can opt to put in a pretax amount to spend annually on services not covered by their insurance.

 

Employers providing health insurance get to choose whether to allow employees the new benefit, however, and could opt to still play by the use-it-or-lose-it rule.

The Wall Street Journal reports the change could affect as many as 14 million families who use FSAs. The rule change could also reduce unnecessary health care spending to eliminate end-of-year balances, the Los Angeles Times says.

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