Posts Tagged: FSA

Health FSA Guidance Released

in Affordable Care Act, Cafeteria Plans

This afternoon the IRS released Notice 2012-40, which provides guidance relating to the $2,500 limit for health flexible spending accounts. The $2,500 limit begins January 1, 2013. In general, the new IRS notice provides the following guidance – · For non-calendar year plans, the $2,500 limit does not apply for plan years that begin before 2013. · In the case of a plan providing the 2 – ½ month grace period, unused salary reduction contributions to the health FSA that are carried over into the grace period for that plan year will not count against the $2,500 limit for the… Continue Reading

Use or Lose Rule Proposed Amendment

in Cafeteria Plans

Treasury has always maintained that it could not change the Code Section 125 use or lose rule for health and dependent care flexible spending arrangements, and that any such change would have to be done by Congress.  Recently, HR 1004 was introduced in the House that would change the “use or lose” rule to a “use and cash out” rule.  The new bill would allow health FSAs to reimburse medical expenses and then cash out any unused amounts at the end of the year, thereby ensuring that no one would lose any health FSA contributions.  A copy of the bill is… Continue Reading