Traditionally, employees had until Dec. 31 to make their medical purchases under a medical flexible spending plan.

Under a rule issued by the IRS in May 2005, employers can have their plans provide a two-and-a-half-month grace period- until March 15- during which eligible expenses can be incurred and reimbursed from funds still unspent at Dec.31.

Could anyone comment on the pros or cons of amending an FSA plan to provide this type of grace period? Our bank has not switched to it yet because "everybody uses up their money before the end of the year anyway and wish they had put more into it."

We implemented this a couple of years ago and have no problems with it. Our plan administrator takes care of all the details so from an HR perspective, there is no additional work. Employees read about these changes too, and some of ours were asking for it. It particularly helps those employees who may have overestimated (and yes, there aren't many, but one always seems to be our CEO!). As long as your administrator is capable of handling it, I don't see any cons.