Health-Care Flex-Spending Accounts Get More Flexible

by Center for Personal Finance editors

Doctors' offices may be a little less crowded than usual toward year's end. That's because you might have an extra 2 � months to spend the money in your flexible-spending account, thanks to a ruling this year by the Treasury Department.

Health-care flex-spending accounts allow you to have money deducted from your paycheck--using pretax dollars--for out-of-pocket medical costs.

In previous years, the "use it or lose it" policy meant some workers either scrambled to schedule appointments or purchase eligible expenses by Dec. 31, or they forfeited the money they hadn't used. Now, some workers have until March 15 to spend unused money in their flex-spending accounts.

But check with your employer--only about half the largest employers in the U.S. plan to extend the grace period this year, about a quarter won't extend it, and another quarter are undecided.

Flex-Plan Services Inc., Bellevue, Wash., provides a list of expenses that are--and are not--eligible.

December 5, 2005