Don’t Lose Your Money – Employers Can Now Allow Their Employees to Carryover up to $500 of their Health FSA

Kevin Hogan • February 1, 2014

Late last year, the IRS announced that it was modifying the health flexible spending account (“health FSA”) “use-it-or-lose-it” rule.  Prior to the change, employees had to use the full balance of their health FSA by the end of the plan year or the money would be forfeited.  This rule sometimes forced employees to unnecessarily spend their health FSA money in order to avoid losing it.

Now, employers can elect to adopt a rule allowing employees to carryover up to $500 of health FSA funds to use in the following plan year.  However, in order to elect the carryover option, the employer must not also have a 2 ½ month grace period (a grace period allows employees to reimburse qualified medical expenses for up to 2 ½ months of the following plan year).  If employers wish to allow carryovers, a plan amendment must be adopted.

One potential problem with allowing carryovers is that it could render an individual with high deductible health plan (“HDHP”) coverage ineligible to make contributions to a health savings account (“HSA”).  In informal guidance, the IRS has indicated that employers might be able to prevent such a result by allowing HSA eligible individuals to waive the carryover or to convert the carryover into some type of limited purpose health FSA.

For more information about the carryover, see IRS Notice 2013-71.

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1 While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health. Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization? Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness. Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
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