You can now read 5 articles in a month for free on BostonGlobe.com. Read as much as you want anywhere and anytime for just 99¢.

Rules change on unused funds in health spending accounts

WASHINGTON — Workers who take advantage of special tax-free accounts to pay out-of-pocket medical expenses could soon be allowed to carry over up to $500 from one year to the next.

For nearly 30 years, employees who were eligible to use the accounts had to forfeit any unspent money at the end of the year.

Continue reading below

A new rule will now permit employers to let plan participants roll over up to $500, the Treasury Department said Thursday.

Employers who sponsor the plans, however, are not required to offer the option.

Some plan sponsors may be eligible to start letting workers carry over the money at the end of this year, Treasury said in the announcement. Others may have to wait until next year to start offering the feature.

‘‘Today’s announcement is a step forward for hard-working Americans who wisely plan for health care expenses for the coming year,’’ Treasury Secretary Jacob Lew said in a statement.

The accounts, known as flexible spending accounts, allow employees to contribute up to $2,500 a year from their pay, before taxes are deducted. The accounts can then be used to pay certain medical expenses not covered by insurance, including co-pays.

‘I’d like to see more done to expand these critical accounts.’

Quote Icon

Treasury says an estimated 14 million people use the accounts.

Employees generally decide how much to set aside in the accounts before the start of the year. But it can be difficult to estimate medical expenses a year in advance discouraging some people from taking advantage of the accounts.

Senator Orrin Hatch, Republican of Utah, said: ‘‘Allowing Americans who have one of these accounts to roll $500 over to the following year just makes sense and will give people more help to pay for out-of-pocket health care costs.’’

‘‘I’d like to see more done to expand these critical accounts that empower the individual to make informed health care decisions using money they saved,’’ Hatch said.

Some plans currently provide workers with a grace period at the start of the year to spend the money in the accounts, up to 2½ months. The new rule says plans can offer either a grace period or the $500 rollover, but they cannot offer both.

Loading comments...
Subscriber Log In

You have reached the limit of 5 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week
Marketing image of BostonGlobe.com
Marketing image of BostonGlobe.com
Already a subscriber?
Your city. Your stories. Your Globe.
Yours FREE for two weeks.
Enjoy free unlimited access to Globe.com for the next two weeks.
Limited time only - No credit card required!
BostonGlobe.com complimentary digital access has been provided to you, without a subscription, for free starting today and ending in 14 days. After the free trial period, your free BostonGlobe.com digital access will stop immediately unless you sign up for BostonGlobe.com digital subscription. Current print and digital subscribers are not eligible for the free trial.
Thanks & Welcome to Globe.com
You now have unlimited access for the next two weeks.
BostonGlobe.com complimentary digital access has been provided to you, without a subscription, for free starting today and ending in 14 days. After the free trial period, your free BostonGlobe.com digital access will stop immediately unless you sign up for BostonGlobe.com digital subscription. Current print and digital subscribers are not eligible for the free trial.