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Currently, employers have the option of allowing employees a grace period of up to two and a half months after the end of the year to spend unused funds. With this change, an FSA cannot have both a rollover feature and a grace period. ASHA's plan currently has a grace period; therefore, we will have to chose what works best for our staff going forward. My thinking is the rollover will be more beneficial to staff.
I’m looking into amending our plan to implement the rollover instead of the grace period for 2014. We won’t make any changes for 2013 because (1) I think it’s awfully late in the year to be changing the rules on folks, and (2) I’m not confident our vendor is set up to implement the rollover effectively for this year. (I've actually read quite a few articles that caution employers that vendors may not be ready to administer the new provisions for the 2013 plan year.)
I like the additional flexibility the change provides, but I'm curious why they would announce a change when most employers have already signed contracts and solidified their plans for 2014 and are in the midst of open enrollment. Even if you allow for the government shutdown, I would have considered two weeks ago late to be announcing a change too. But, like I said, it's a good change and I'm pleased to be able to enhance a benefit for our staff.
Remember: If you're thinking of moving to a high deductible plan with an HSA next year. You and your covered dependents need to make sure you have a $0.00 balance in any existing FSA accounts, so that you can open an HSA at the beginning of the year.
- Consumers Can Rollover $500 in an FSA ~WSJ 10/31/13
- FSA Use-It-Or-Lose-It Rule Modified ~SHRM 10/5/13
- IRS details FSA $500 carryover-HSA contribution rules ~Business Insurance 3/28/14
- Flexible spending accounts' future uncertain as health care rules evolve: IRS allows new options for annual carryovers ~Business Insurance 4/6/14