A flexible spending account is a great way to save money with healthcare-related expenses by using pre-tax money. However, one of the drawbacks up until now has been the “use-it-or-lose-it” nature of these accounts. At the beginning of each year you must estimate your eligible medical expenses and set aside that amount in your FSA account. Prior to the new rules, you would lose any funds remaining in your FSA account at the end of the year, though often there is a grace period to use those down.
Under the new FSA rules your employer can choose to offer you the option of up to a $500 rollover of unused funds OR a two and a half month grace period, but not both.