Law360, New York (November 14, 2013, 6:29 PM EST) -- On Oct. 31, 2013, the IRS issued guidance relaxing the use-or-lose rule applicable to health flexible spending arrangements ("FSAs") under employers' cafeteria plans. Now an employer may amend its cafeteria plan to permit plan participants with unused health FSA balances remaining at the end of a plan year to carry over up to $500 to reimburse qualified medical expenses incurred in the next plan year. Employers with calendar year plans that want to adopt this carryover provision for unused health FSA balances remaining at the end of 2013 will need to act quickly. Suggested steps for evaluating and implementing the new rules are provided below. Also, the notice clarifies the scope of IRS regulations issued earlier this year permitting midyear election changes under cafeteria plans with non-calendar year plan years....
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