Last year's change to the longstanding use-it-or-lose-it rulefor flexible spending accounts is driving double-digit enrollmentgrowth.

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Benefit and payment firm Alegeus Technologies said that clientswho have actively promoted the FSA rollover allowance to theiremployer groups and eligible employees are seeing 11 percentincremental growth in FSA enrollment and 9 percent growth in FSAelections—compared to a flat overall FSA market growth.

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Last fall the U.S. Treasury Department issued new rules that letemployers offer employees the $500 carryover. Previously, unusedemployee FSA contributions were forfeited to the employer at theend of the plan year or grace period, which industry insiders saywere a barrier to adoption.

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According to enrollment data from Alegeus, just 8 percent ofemployer groups adopted rollover for their 2014 FSA plans—due inlarge part to the late timing of the rule change. But clients thathave fully embraced the policy change are already seeing 30 percentor higher adoption through mid-year enrollment, the firm said.

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Executives said they expect adoption rates to go muchhigher.

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“The timing of the policy change last year, at the end of theopen enrollment cycle, prohibited many administrators and employersfrom adopting FSA rollover for their 2014 plans,” said Bob Natt,Alegeus executive chairman. “However, with ten months behind us toassess and prepare, now is the ideal time for employers to embracerollover and update FSA plan designs leading into the 2015 openenrollment cycle.”

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“It's still premature to know the full impact of the FSArollover policy change for the 2015 open enrollment cycle,” Nattsaid. “However, early indicators are showing that rollover can havea significant impact for those employers that adopt, drivingdouble-digit incremental growth in both FSA enrollment andcontributions.”

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