Provided by GCG Financial Inc.
Under the relaxed rule, an employer will now, at its option, be able to allow participants to carry over up to $500 in unused health FSA funds into the next year. Under Internal Code (Code) section 125, a health flexible spending account (FSA) is an employer-sponsored account that employees can use to pay for or reimburse their qualifying medical expenses on a tax-free basis, up to the amount contributed for the plan year. Health FSAs are subject to a“use-or-lose” rule, stating that any unused funds at the end of the plan year (plus any applicable grace period) will be forfeited. On Oct. 31, 2013, the Internal Revenue Service (IRS) released Notice 2013-71 (Notice), which relaxes the “use-or-lose”rule for health FSAs.
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This article is provided by GCG Financial, LLC. It is to be used for informational purposes only and is not intended to replace the advice of an insurance professional. Visit us at https://gcgfinancial.com. © 2011-2014 Zywave, Inc. All rights reserved. This information is for general informational purposes only. While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and GCG makes no representations or warranties regarding its accuracy or completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. Users should seek professional advice from their own attorneys and tax and benefit plan advisors with respect to their individual circumstances and needs.