Hi, I’m Thomas, and I work for the IRS.
If you’ve avoided participating in a Flexible Spending Arrangement (FSA) because you’re worried that you’ll lose your money at the end of the year, your employer may now offer a new option that can let you carry over as much as $500 to the following year.
Employers have the option of offering this carryover provision or offering a 21/2 month grace period to spend your FSA dollars instead.
They can offer you one, or the other, but not both options in their FSA plan.
An FSA is a workplace plan that lets you choose to receive tax-free reimbursements of health expenses, such as co-pays and deductibles instead of taxable pay.
Under this new option, if you still have up to $500 unused dollars available at the end of this year and your employer provides for the full carryover, you can simply leave the money in your FSA and use that money for next year’s health care expenses.
You can find out more about Flexible Spending Arrangements by visiting our website at IRS.gov.