Time to make choices for 2016 flexible spending plan

An employer-sponsored health flexible spending arrangement (FSA) is a type of medical reimbursement plan that allows employees to be reimbursed for certain medical expenses that aren’t covered by the employee’s health plan. Employee benefits attorney Brandon Long was interviewed by The Oklahoman about the rules and regulations regarding flexible spending plans for 2016.

“Most employees who choose to participate in an FSA can contribute up to $2,550 during the 2016 plan year, assuming that is allowed by their employer’s plan,” said Long. “Amounts contributed aren’t subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer also may contribute to an employee’s FSA.”

Long explained that FSAs are subject to a “use or lose” provision, which requires participating employees to incur eligible expenses by the end of the plan year or forfeit and unspent amounts. “However, under a special rule, employers may choose to offer participating employees more time through either a carryover option or a grace period option. Under the carryover option, an employee can carry over up to $500 of unused funds to the following plan year.”