IRS Allows $500 Carry-Over Total for FSAs

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

Jacob Lew, February 12, 2011
National Journal
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Clara Ritger
Nov. 1, 2013, 3:17 a.m.

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.