WALTHAM, Mass.--(EON: Enhanced Online News)--Alegeus Technologies, the market leader in healthcare and benefit payments, is pleased to report a major Federal policy change relating to flexible spending accounts (FSAs) that has many positive implications for all FSA constituents. In an announcement today, the US Treasury Department modified its FSA “use-it-or-lose-it” provision to allow rollover of FSA funds. Effective in plan year 2014, employers that offer FSA programs will have the option of allowing participants to roll over up to $500 of unused funds at the end of the plan year. Effective immediately, employers that offer FSA programs that do not include a grace period will have the option of allowing employees to roll over up to $500 of unused funds at the end of the current 2013 plan year.
“This policy development is fantastic news for everyone involved with FSAs – but especially for participants themselves”
FSAs allow employees to contribute pre-tax dollars to pay for out-of-pocket healthcare expenses – including deductibles, copayments, and other qualified medical, dental or vision expenses not covered by the individual’s health insurance plan.
Over 85 percent of large employers offer FSAs today, but only 20-22 percent of eligible employees actually enroll. One of the principal reasons cited for not enrolling, or for underfunding accounts, has been the fear of forfeiting unused funds at the end of the plan year as a result of the "use-it-or-lose-it” provision. Under this rule, any funds remaining in an FSA at the end of the plan year (or after a grace period) were forfeited to the employer – even though the funds have been contributed directly by the employee via payroll deduction. One in four FSA participants has suffered such forfeitures every year.
“We greatly appreciate the Administration’s leadership in putting forward this important policy that will benefit employers, employees and their families, by giving them greater control and choices in their healthcare planning. By allowing FSA participants to roll over a part of their unused funds at the end of the plan year, the Treasury Department has eliminated the most significant barrier to FSA participation – namely consumers’ fear of losing their money,” said Bob Natt, Executive Chairman of Alegeus Technologies. “With this new provision in effect, there is really no reason for eligible employees not to enroll and contribute to an FSA – all contributions are tax-free, the employee’s full election is available on the first day of the plan year, and now unused funds up to $500 can be rolled over to the next plan year.”
The new rollover provision creates an expanded value proposition for FSAs and offers enhanced healthcare options for participants. The new rule offers greater funds protection for participants that are most concerned about cash flow – such as lower-and middle-income workers who make up more than 70 percent of FSA participants. The rollover provision also provides added flexibility for those with unpredictable out-of-pocket healthcare costs – such as those dealing with chronic conditions that may face high-cost services/procedures with some ambiguity regarding timing or medical necessity. The FSA rollover provision also counters any incentives that may exist for unnecessary year-end spending by FSA participants seeking to avoid losing their FSA funds.
“This policy development is fantastic news for everyone involved with FSAs – but especially for participants themselves,” said Natt. “For many years now, Alegeus has been actively engaged in the dialogue in Washington DC, leading industry efforts to educate and convince Federal policymakers to adopt this major new feature for flexible spending accounts (FSAs). For our clients and their employer customer and participants, this will certainly lead to growth in FSA adoption this open enrollment season.”
To learn more about the FSA rollover provision, visit the Alegeus Technologies online resource center at www.alegeus.com/FSArollover.
About Alegeus Technologies
Alegeus Technologies is the market leader in healthcare and benefit payments – offering the industry’s most comprehensive platform for the administration of tax-advantaged benefit accounts (FSAs, HSAs, HRAs, MERPs, VEBAs, DCAPs and transit accounts), the industry’s most widely-used benefit debit card, and leading services for the outsourced management of claim payments and associated data exchange. Over 500 clients – including health insurance plans, third party administrators and financial institutions – leverage Alegeus’ deep expertise and proven technology to administer benefit accounts for more than 17.5 million members and process more than $18 billion in healthcare payments annually. As the healthcare and benefit markets continue to evolve, Alegeus delivers solutions that enable clients to evolve their service offerings, operate their businesses more efficiently, and focus on their customers. The company is headquartered in Waltham, MA with operations in Carrollton, TX, Orlando, FL and Milwaukee, WI. To learn more about Alegeus, please visit www.alegeus.com.