Modification Of Use-or-Lose Rule For Health Flexible Spending Arrangements (FSAs) And Clarification Regarding 2013-2014 Non-Calendar Year SalaryReduction Elections Under § 125 Cafeteria Plans

October 30, 2013
In October 2013, The Office of Division Counsel/Associate Chief Counsel published a report on the proposed modification of the Use-or-Lose Rule for Flexible Spending Arrangements. This modification permits § 125 cafeteria plans to be amended to allow up to $500 of unused amounts remaining at the end of a plan year in a health FSA to be paid or reimbursed to plan participants for qualified medical expenses incurred during the following plan year, provided that the plan does not also incorporate the grace period rule.
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