When it comes to a Healthcare Flexible Spending Account (FSA), the “Use It or Lose It” rule is no longer the rule.
Companies may now allow employees to carry over up to $500 of Healthcare FSA balances remaining at the end of a plan year, thanks to a rule change issued by the U.S. Department of the Treasury last October.
WageWorks advocated for this rule change, and we welcomed it when it came to pass. We believe it’s great news for working Americans, in that it removes the most common barrier to employee participation in FSA programs: the perceived risk of losing money left unspent in an FSA at the end of the year. And, as we were quoted recently in the Wall Street Journal, participating in an FSA is one of the Top 10 ways employees can put more money in their pockets each year.
So, the “Use It or Lose It” rule change is great news for employees. But what’s in it for your company?
It’s simple: greater tax savings and higher employee satisfaction with their benefits. This is why we encourage the adoption of the carryover option.
When your company adopts the new carryover option and offers it to your employees, more employees are likely to participate in your WageWorks Healthcare FSA program. More employees may try out an FSA for the first time. And for those employees who already have an FSA, there’s a greater chance they’ll put more money in it. And all this adds up to greater tax savings for your company.
Based on its early adoption among a selection of our clients, the carryover option is expected to significantly increase employee participation in WageWorks Healthcare FSA programs. Our new brochure provides all the details. For more information, please see the resources we’ve compiled on the “Use It or Lose It” rule change here.
WageWorks has made it quick and easy for your company to adopt the new carryover option. All you need to do is sign and return the WageWorks FSA Carryover Plan Amendment and communicate the option’s availability to your employees. WageWorks handles the rest.
The carryover option is a win-win for you and your employees. And at WageWorks we make Consumer-Directed Benefits work for you.