Park City, Utah (PRWEB) November 09, 2013
Today, Zane Benefits, the number one online small business health benefits solution, published new information on FSA new rules.
According to Zane Benefits’ website, on October 31, 2013 the US Treasury and IRS announced a modification to health Flexible Spending Accounts (FSAs). Specifically, employers can now allow up to $500 in unused health FSA balances to rollover to the next year.
FSAs are sponsored by employers, and are (usually) 100% employee funded. FSAs are one way for employees to use pre-tax dollars to pay for medical expenses, such as doctor visit copays, vision expenses, and prescription drug costs.
Since the creation of FSAs in the 1970's, FSAs have been “use it or lose it” - meaning if an employee did not use the funds in the FSA by the end of the plan year they forfeited those funds to the employer. Under the change, employers now have a choice of allowing employees to carryover up to $500. In 2005, the Treasury allowed a 2.5 month grace period for spending down FSAs, as a way of softening the “use it or lose it” rule. Employers now will be able to offer either the grace period or the $500 rollover provision, though not both.
According to the Treasury, the rule change could reduce the incentive by employees for unnecessary spending at year-end to avoid losing the money set aside. Because of the “use it or lose it” rule many employees are reluctant to put money into the plans for fear of losing whatever they don't use. However, many employees also see FSAs as "old school". For example, when given the option, it's smarter to put funds into a Health Savings Accounts (HSAs) rather than an FSA because the funds are more flexible and allow full rollover with an HSA.
About Zane Benefits
Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform ("ZaneHealth") for defined contribution health care. The flagship software provides a 100% paperless administration experience to small businesses and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about Zane Benefits, visit http://www.zanebenefits.com.