Important News Regarding the 2014 Flexible Spending Plan (FSA)
Last week, the US Department of the Treasury and the IRS released a notice which modified the “use it or lose it rules” applicable to healthcare Flexible Spending Account (FSA) plans.
Effective with the 2014 plan year, FSA participants will have the ability to carryover up to $500 of unspent healthcare FSA monies into the following plan year (the 2015 calendar year), and will have that entire year to incur and submit eligible expenses against those carryover dollars. This change will provide FSA participants with more flexibility to spend their healthcare FSA dollars when they need them. Individuals frequently cite the risk of forfeiting unspent funds as the primary reason for not participating in an FSA plan – the ability to carryover up to $500 to be spent at any time during the following year will reduce that risk and provide participants with more control over their money. This change should allow more individuals to take advantage of the tax-savings opportunities that result from FSA participation.
Other important points:
ü If you are a current participant in the 2013 healthcare FSA plan, there are no changes for this plan year. At the end of 2013, you will still be permitted to rollover an unlimited amount of unused healthcare FSA monies, and submit eligible expenses which are incurred in the first two months of 2014 (the “grace period”, which ends February 28, 2014). Any 2013 healthcare FSA funds which have not been spent by February 28, 2014 will be forfeited. If you enroll in the 2014 FSA plan, you will no longer have a two month grace period - instead you will be able to carry over up to $500 of any remaining healthcare FSA balance from your 2014 account and you will have the entire year of 2015 in which to spend it.
ü This new carryover provision does not impact the dependent care FSA plan. All dependent care FSA claims must be incurred during the calendar year for which the FSA election was made. Unused dependent care FSA funds will be forfeited.
ü For both the healthcare FSA and the dependent care FSA, participants will continue to have three months after the calendar year ends (until March 31 of the following calendar year) to complete and submit reimbursement requests for claims which were incurred during the plan year.
If you would like to participate in the 2014 FSA plan, now is the time to take action. Open enrollment for the 2014 FSA plan ends this Friday November 15, 2013.
If you have any questions regarding this plan change, or regarding the FSA open enrollment, please contact me at extension 4427 or e-mail balla@calu.edu.