A new option is now available to users of health care flexible spending accounts. Late last year, the federal government enacted new rules whereby employers offering FSAs can allow up to $500 to be carried over from one year to the next in an FSA, making for greater flexibility. Employees won't have to risk losing their funds, as before.

With health savings accounts, or HSAs, the money can be carried over; employees keep it all if they don’t use it, without a cap, and it follows the employee to a new job. Employees cannot have both an FSA and an HSA, unless the FSA is for a “limited purpose,” e.g., for covering dental and vision care costs.

Ballard Spahr employee benefits attorney Edward I. Leeds said the IRS recently clarified that this restriction applies even if the only funds remaining in an FSA were carried over from the previous year.

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