Right now it does.
Recently the IRS issued Notice 3013-71, which allows employees with Medical Flexible Spending Accounts (FSA’s) to carryover up to $500 from one FSA plan year to the next. Previously, all monies in an FSA were ‘use or lose’ – That is, nobody was allowed to carryover FSA account balances from one year to the following plan year. Any money not claimed from your FSA account balance at the end of the plan year gets vaporized.
Thankfully, this ruling takes effect automatically in Private Sector Medical FSA’s that do not already have a ‘carryover’ provision (currently some private plans have a grace period of up to 85 days).
For Federal Employees, the problem is that OPM has to change the FSAFEDS regulations in order to implement the IRS’ newly-allowable $500/1-year FSA carryover. Currently FSAFEDS operates Medical Flex Spending Accounts in ‘Use or Lose’ mode.
Until Congress and OPM take action, Private Sector FSAs are a better deal- That is, they are much more ‘Flexible’- than Federal Employee FSAs.
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