Under IRS rules, distributions from an employee’s health Flexible Spending Account (“health FSA”) may only be made to reimburse the employee for qualified health expenses. In addition, the IRS “use it or lose it” rule generally requires an employee to forfeit any unused balance in his or her health FSA account at the end of the year. Pursuant to the Heroes Earnings Assistance and Relief Tax (“HEART”) Act, however, cafeteria plans may now be amended to permit an employee who is called to active duty for at least 180 days (or an indefinite period) to request the unused balance remaining in his or her health FSA without any corresponding qualified health expenses. These “qualified reservist distributions” are included in the employee’s gross income and wages, are subject to employment taxes, and must be reported as wages on the employee’s Form W-2.