Workforce Bulletin

I recently coauthored a Client Alert, “IRS Chips Away at the FSA 'Use-or-Lose' Rule” with Jeffrey Lieberman, one of my colleagues in the Employee Benefits practice at Epstein Becker Green.

The following is an excerpt:

Under new guidance issued by the Treasury Department and Internal Revenue Service, Section 125 cafeteria plans can be, but are not required to be, amended to allow up to a maximum of $500 of unused amounts remaining at the end of a plan year in a participant’s health flexible spending account to be carried over to the next plan year and used to reimburse the plan ...

Cafeteria plans which provide a health flexible spending arrangement (FSA) allow participants to make pre-tax salary contributions to an account in order to receive reimbursements to pay for medical expenses that are not reimbursed through insurance or another arrangement (e.g., co pays, deductibles, eyeglasses).  Prior to the Patient Protection and Affordable Care Act of 2010, sponsors of these plans could set an annual limit for contributions to health FSAs per plan terms.  Sponsors typically established such limits by taking into consideration the uniform coverage rule ...