On October 31, 2013 the U.S. Department of the Treasury modified the “Use It or Lose It” rule for healthcare Flexible Spending Accounts (FSAs) to make them more flexible and consumer-friendly.
This rule change is a win-win for employers and employees alike. Find out what it means for you.
You now have the flexibility to allow employees to carry over up to $500 of their unused WageWorks FSA account balance remaining at the end of a plan year, or offer grace period to spend those funds. Your company may be able to adopt a carryover provision as early as plan year 2013. If you decide to take advantage of this great new feature for the 2013 plan year, you will need to amend your plan document to include the carryover provision (and eliminate the grace period if your 2013 plan incorporates that feature) on or before the last day of the 2013 plan year. Please contact your Relationship Manager to discuss your plan options and understand how to complete the amendment.
The rule change removes the most commonly cited reason for why employees choose not to sign up for an FSA - the risk of losing money left unspent in an FSA at the end of a plan year. With less risk, you may experience higher employee participation rates, resulting in greater corporate tax savings and a healthier and happier workforce. Please see our communications sample to help educate your employees on this exciting change.
With more participation in your FSA program, you are poised for greater payroll tax savings. This rule change also benefits employees by providing them the opportunity to set more money aside in a healthcare FSA with less risk of losing any of their money. It’s a win-win for employers and employees. Ask your Relationship Manager how to get started.
With the new rule, up to $500 of your unused WageWorks healthcare FSA balance can be carried over into the next plan year instead of you “losing it” - making enrollment in an FSA much less risky. This gives you more flexibility to spend your FSA money when you need it. You can use it for necessary out-of-pocket healthcare expenses, rather than feeling pressured to engage in last minute and potentially unnecessary spending at the end of the year or grace period.
Quit worrying about having to precisely predict your out-of-pocket medical expenses a whole year in advance. The new carryover feature assures that any unused balance of up to $500 will still be there for you in the next plan year. If you have never had an FSA, you can now experience the benefits of this great pre-tax benefit without risking the loss of any of your hard earned money. Simply start by selecting an annual amount of $500 and know that even if you don’t use any of it during this plan year, it will be there for you the following plan year. Taking advantage of valuable tax saving just got so much easier.
With the rising cost of healthcare, your employer offers you a great way to save on out-of-pocket expenses with your FSA. By using pre-tax dollars, you will save an average of 30% when you pay for office visits, prescription drugs, contact lenses, and more with your FSA dollars. With the new carryover feature, you don’t have to worry about losing unused funds (up to $500), so get started and save! Ask your employer about the healthcare FSA and the carryover feature.
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