Ever since the Affordable Care Act put a new limit on pre-tax contributions into a Flexible Spending Account (FSA) – $2,500 – the IRS has been looking at the feasibility of modifying the rules that require forfeiture of unused money in the account at year end. This is possible because the lost revenue to the government has been cut by the new cap.
One possibility is that a set amount, perhaps $500, could be rolled over from year to year. This would be good news for plan participants who lost value in such plans because of the $2,500 cap.
In any case, a change is still under consideration. Employer groups have urged a decision be made early in 2013 so that employers and administrators can modify their systems in time for 2014 open enrollment periods in the Fall. It is also possible the carryover may be an option for plans as opposed to a requirement.
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