Use or Lose Rules Mostly Involve Medical Accounts

The use or lose feature of FSAs primarily affects the medical/dental accounts allowable in such programs. That’s because payouts from those accounts occur sporadically, when a participant incurs a medical or dental cost not borne by insurance, and thus can be unpredictable. Payouts from dependent care accounts, in contrast, tend to be predictable and regular-such as the monthly tuition charged by a child care center. By law, dependent care accounts can be no more than $5,000 a year. There is no restriction on the size of medical/dental care accounts, but they likely will be limited to $2,000-$3,000 a year. That figure will be set in the contract award to the carrier, which is yet to be announced.