Benefits

The IRS and the U.S. Treasury Department recently made a change that allows employers to elect to increase the length of time permissible to incur and file claims to flexible spending accounts. That change has recently been approved by President Todd and adopted for the University of Kentucky’s health care and dependent care flexible spending accounts for the 2005-2006 plan year.

This change was made by the IRS and U.S Treasury Department, in part, as a compromise to the “Use it or Lose It” rule. In previous years, any funds remaining in flexible spending accounts at the end of the plan year, June 30th, could not be claimed by participants. The adopted change provides additional time to incur and file claims.

Participants will be granted a grace period of an additional two months and 15 days each year to incur claims. For University of Kentucky participants, this means that the time period in which to incur claims will be extended from June 30, 2006 to September 15, 2006. The 90-day run-out period (the time period in which to file claims after the September 15 grace period) still applies. Therefore, University of Kentucky flexible spending participants will be able to file claims incurred by September 15, 2006 for reimbursement through December 15, 2006.

Even though the new plan (2006-2007) year begins July 1, 2006, any claims incurred on flexible spending accounts through September 15, 2006, will be reimbursed with remaining pre-tax dollars from the 2005-2006 plan year.

UK Director of Employee Benefits Joey Payne indicated the change is positive for employees and hopes the new flexibility will increase participations in the flexible spending account program.

Employee Benefits Customer Service representatives are available to answer any questions you may have regarding this change. They can be reached at (859) 257-9519 option 3 if you have questions.

For more information on flexible spending benefit, click here.