For Brokers: New FSA “Use-it-or-Lose-it” Provision Announced
Last week, the Department of Treasury issued a press release and informational fact sheet announcing a major policy change relating to flexible spending accounts (FSAs) that has many positive implications for all FSA participants. The Department of Treasury has modified its FSA “use-it-or-lose-it” provision to allow a limited rollover of FSA funds.
- Effective in plan year 2014, employers that offer FSA programs will have the option of allowing participants to roll over up to $500 of unused funds at the end of the plan year.
- Effective immediately, employers that offer FSA programs that do not include a grace period will have the option of allowing employees to roll over up to $500 of unused funds at the end of the current 2013 plan year.
What you need to do:
- Discuss with your clients whether they would like to modify their plans.
- Those who would like to change their plan will need to modify their plan documents in order to incorporate this change, possibly as early as Nov. 30, 2013.
- So that employees can take advantage of this change, you will want to emphasize this change in your upcoming open enrollment meetings, assuming your client would like to make the change.
As a result of these new changes, almost all employees with medical, dental and vision expenses ought to consider contributing at least $500 to their Healthcare Flexible Spending Account (FSA).
Click here to obtain a sample employee letter, which will need to be customized in order to address your individual client’s circumstances.
For more information on the new FSA rollover provision, contact The Harrison Group President Rich Miller at 610.853.9075 or e-mail firstname.lastname@example.org.