The U.S. Treasury Department changed a rule last October to
allow employees to roll over $500 of unspent Flexible Spending Account money,
ending years of a use-it-or-lose it policy, but most workers have yet to reap
Only 8 percent of U.S. companies adopted the FSA program
this year, according to data from Alegeus Technologies, the largest provider of
benefit administration services. But that figure could jump to as much as 50
percent in 2015, predicts Alegeus Executive Chairman Bob Natt. FSAs allow
workers to set aside pretax money for healthcare expenses.
Employees will likely find out if their company is taking
part in the rollover program when they get their open enrollment benefit
information this fall.
Those offered the new option will be able to place up to
$2,500, pretax, in their FSAs, and roll over as much as $500 of unspent money
at the end of the year. Those who continue in traditional FSA plans will have
to use all their funds by year-end, or when a grace period stipulated by their
But the program's participation rate is meager. About 33
million Americans contribute to an FSA each year. That number includes only a
quarter of the workers eligible for it at large corporations, according to
benefit consultant Mercer, a unit of Marsh & McLennan.
That enrollment could be boosted by the new rollover
benefit, Alegeus' Natt says, allowing both employees and employers to benefit
from not paying tax on those contributions.
PrimePay, a third-party benefit administrator, which heavily
promoted the rollover option to clients last year, saw a 30 percent adoption
rate. The companies that participated saw a 17 percent increase in participants
and contribution dollars. FSAs can still be a hard sell to employees.
If your company does adopt a rollover model, Natt's advice
is to put at least $500 in, because you are at no risk of losing it. If you
leave the company and still have a balance on the books, however, you'll need
to spend that balance down.
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