Spending Account Program Gets More Flexible

Several improvements in the flexible spending account program for federal employees have been ordered in light of a recent Treasury Department decision allowing employers to create a 2 1/2 month “grace period” beyond the end of a plan year in which employees may charge eligible expenses against that plan year. The Office of Personnel Management has announced that FSA enrollees will be able to incur eligible expenses through March 15, 2006, and have those expenses paid from their 2005 account balance. If the 2005 account balance is not sufficient to reimburse in full an eligible expense incurred during the grace period, the unpaid balance will roll forward to any 2006 account the employee established. If the employee does not have a 2006 account, the expense will not be reimbursed in full.