For Clients: 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, if you offer FSA programs you 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:
- Decide whether you would like to modify your plan. The cost to restate your plan documents will be a one-time fee of $250. All other fees that you are paying will remain the same.
- You may have to modify your documents as early as Nov. 30, 2013. The Harrison Group will be contacting you to discuss the details.
- So that your employees can take advantage of this change, you will want to emphasize this change in your upcoming open enrollment meetings, assuming you would like to make the change.
As a result of these new changes, almost all employees with medical, dental and vision expenses should contribute 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.