About four in ten workers with health flexible spending accounts left money behind in 2024, forfeiting an average of $404 each, and the stakes rise next year when workers can put more into the accounts.
The figures come from an October report by the Employee Benefit Research Institute covering more than 3.3 million accounts with over $3.9 billion in contributions. The average forfeiture among those who lost money was down from $436 the year before, and account holders under 25 were more likely to leave money unused than those 65 and older.
The IRS said Thursday that the health FSA contribution limit rises to $3,500 in 2027 from $3,400 in 2026, with a permitted carryover of up to $700, up from $680, for plans that allow it, the agency announced. Plans may offer a carryover or a grace period of up to two and a half months, but not both, and deadlines are not universally December 31, so workers should check with their plan administrator.
Health FSAs let workers set aside pretax money for eligible medical expenses, but many plans are use it or lose it. Even workers who forfeit some money can still come out ahead if their tax savings exceed what they lost, said Jake Spiegel, the EBRI researcher behind the study, CNBC reported. Unspent balances can go toward thousands of eligible expenses, from doctor and dentist visits and prescriptions to over-the-counter medications, sunscreen, first-aid supplies and certain health-monitoring devices.
JBizNews Desk | Washington, D.C.
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