The “use-or-lose” rule for health flexible savings spending arrangements (FSAs) has been modified to allow plan participants to roll over $500 of unused balances at the end of each plan year (providing that the plan does not also incorporate the grace period rule). The rolled-over amount must be used the following year, or it will be lost.
Government agencies made the decision to modify the rule after acknowledging the difficulty of predicting future needs for medical expenses, as well as the need to make FSAs accessible to a wider range of income levels.
You can view the IRS announcement in its entirety here.