"It will be a little more hassle for the administrators," says Scharin. "The employer will basically will be working with two plan years in the same year. But from the public relations side, companies will probably do it."

And just in case you have both a medical and dependent-care FSA and were hoping to use the rule change to integrate the benefits, don't even think about it. You can't transfer excess from one account to another that's already been depleted. In the rule announcement, the IRS specifically warns that "unused amounts elected to pay or reimburse medical expenses in a health flexible spending arrangement may not be used to pay or reimburse dependent care or other expenses incurred during the grace period."

Deducting your headaches
The treatment deadline extension is the latest effort by tax officials to make spending plans more attractive. In 2003, the IRS ruled that over-the-counter drugs can be paid for with flexible spending account money. Previously, account holders were limited to paying for prescription-only purchases.

"Since many prescription drugs have moved to the over-the-counter market, this action today makes paying for them a little bit easier to swallow," said then-Treasury Secretary John Snow in making the OTC announcement.

Consumers generally were pleased when drugs that once required a doctor's authorization became available on drug and grocery store shelves -- until they realized that their work-provided health plans no longer helped pay for the medications. In many cases, the over-the-counter drug was less expensive than its prescription predecessor, but patients ended up paying more because they had to cover the full price and not just a nominal insurance copayment. Now, the account funds can cover that excess.

A pre-approved benefits 'loan'
You also can get to the money even before it's in your account.

Say you elected to put $2,400 in your medical spending account, with $200 a month coming from each of your 12 paychecks that year. In early March, your son fell off his bike and, in addition to breaking his arm, all his expensive orthodontia had to be redone. When all the damage was added up, you faced $950 in deductibles not covered by your health insurance.

Although you only had $400 in your account when the accident occurred, federal guidelines allow you to submit your out-of-pocket expenses immediately for repayment. This way, you get cash now against the total amount you pledged to pay into the account. On the plan's books, your account will show a deficit that you will "pay off" each month until it's zeroed out and you start accruing reimbursement money again.

Just make sure you know your company's policy if you leave your job before your refill your FSA account. You could see any due amount taken out of your last paycheck.

Use it or lose it ... later
While the option to give employees more time to use FSA money is welcome, it doesn't change the use-it-or-lose-it component. It just means the possibility of wasting FSA money will simply be deferred. After the two-and-a-half-month extension, any unused money will be forfeited as before.