NPR : News

Filed Under:

Rule Change Allows Rollover For Flexible Spending Accounts

Workers who put money into "use it or lose it" Flexible Spending Accounts each year could benefit from a new Treasury Department rule change letting them roll over up to $500 at the end of each year.

Flexible Spending Accounts, or FSAs, allow employees to set aside money from their monthly paychecks to pay for such things as medical expenses or dependent child care that are not covered by insurance. Each year, they can accrue up to $2,500 without payroll taxes, but if the set-aside amount isn't used before the end of the calendar year, it is forfeited.

The change, announced Thursday, modifies a 30-year-old restriction and now allows workers to carry over up to $500 into the next calendar year without being penalized.

Secretary of the Treasury Jacob Lew said in a statement that the "announcement is a step forward for hardworking Americans who wisely plan for health care expenses for the coming year."

About 14 million Americans use FSAs. But it can be difficult to predict how much will be used from the account, and the prospect of losing unused money has discouraged many people from using the accounts.

The Los Angeles Times reports:

"With less risk of such forfeitures now, experts predicted that more workers, particularly lower- and moderate-income employees, would take advantage of the deductions for everyday medical expenses, such as co-pays, over-the-counter drugs and other items not normally covered by health insurance.

" 'We are always looking for ways to provide added flexibility and common-sense solutions to how people pay for their healthcare,' Lew said.

"Treasury officials began taking public comments on the change last year, and they said the response was overwhelmingly in favor of giving workers more leeway.

"The new rules go into effect immediately, but they aren't mandatory for employers. Firms can decide whether to make the change and when to make it."

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

NPR

Barbershop: UofL Basketball Ban, Football Concussions And The NFL Women's Summit

ESPN contributor Kevin Blackistone, Bloomberg View's Kavitha Davidson and The Washington Post's Wesley Lowery talk about the UofL basketball team, public opinion of the NFL, and women in sports.
NPR

After Introducing Changes, Keurig Sales Continue To Fall

Despite America's high coffee consumption, Keurig reported disappointing sales this week. Even during its popular holiday selling period, the numbers haven't perked up in recent years.
NPR

On The Clock: Rubio Gets The Most Talking Time In Tonight's Debate

It was the last debate before the New Hampshire primary and Donald Trump was back onstage. Which GOP candidate ended up with the most talking time?
NPR

How Limited Internet Access Can Subtract From Kids' Education

Smartphones are often credited with helping bridge the "digital divide" between people who do and don't have Internet access at home. But is mobile Internet enough for a family with a kid in school?

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.