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Some members of the public are calling for an end to the “use it or lose it rule” of health flexible spending accounts.

Navigating health reform

Public Requests Elimination of FSA “Use It or Lose It Rule”

  • 10/24/2012

Public Requests Elimination of FSA “Use It or Lose It Rule”

Treasury attorney advisor Kevin Knopf reports that members of the public responding to IRS Notice 2012-40 regarding health flexible spending accounts (health FSAs) have requested that the government eliminate the “use it or lose it rule.” The rule requires health FSA participants to use up their entire account balance for the calendar year, or lose any balance that remains.

The Patient Protection and Affordable Care Act imposed an annual $2,500 limit on employee contributions to health FSAs after 2012. Previously, there was no statutory cap on employee contributions, although employers usually imposed a cap.

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