Carryover $500 from Health Care Reimbursement Account

Duke employees who use a Health Care Reimbursement Account won't have to worry about using up every last penny of their contribution this year and beyond.

Typically, reimbursement account participants have needed to spend all the pre-tax money in their account because any leftover contribution couldn't be rolled over into the following year. That's changed for 2014 and in years to come.

The U.S. Department of the Treasury and Internal Revenue Service recently modified the longstanding "use it or lose it" rule that required any remaining balance at the end of the plan year to be forfeited. The new "carryover" provision is effective for the 2013 plan year, which means that faculty and staff with up to $500 of unused funds in a Health Care Reimbursement Account on Dec. 31 will have money automatically carried over for use of eligible expenses in 2014. 

"This is a positive change for our employees and will help them avoid losing money in their account leftover at the end of the year." said Kyle Cavanaugh, vice president of administration. "We only wish we were notified of this change by the IRS prior to open enrollment, so people could have considered this in making their elections for 2014."

Here's how a Health Care Reimbursement Account can save you money.

The carryover will be in addition to the amount of a contribution for next year's plan, even if an employee elected the maximum contribution limit of $2,500.

The change is welcome news to Vikki Grossman, a staff assistant in Duke's Department of Anesthesiology. She noted that determining her contribution to a Health Care Reimbursement Account can be tricky, since it involves lots of planning.

"Overestimating is not uncommon, as you're considering expected and unexpected medical expenses," she said. "At the end of the year, you have either depleted your account or running around purchasing approved items you may not need. Really, how many boxes of Band-Aids does one need?"

In addition to an employee's own contribution, Duke also provides payment into a reimbursement account for faculty and staff using the Duke Basic health plan. Duke's contribution ranges from $200 for an individual on Duke Basic up to $600 for an employee and his or her family.

"HRAs have always been a positive opportunity for faculty and staff to save money and find an easy way to handle health care costs," Cavanaugh said. "It's good news to know our employees will be able to further utilize their benefits into next year."

Cavanaugh said the new provision only applies to a Health Care Reimbursement Account and is not applicable for a Dependent Care Reimbursement Account.

For more information about the Healthcare Reimbursement Account, visit the Human Resources website.