To amend the Internal Revenue Code of 1986 to allow amounts in a health flexible spending arrangement that are unused during a plan year to be carried over to subsequent plan years or deposited into certain health or retirement plans.

Amends the Internal Revenue Code to permit up to $500 of unused health benefits to be carried forward to the next year of a health or retirement plan or arrangement, or to be contributed to a health savings account or a qualified retirement plan, without affecting the status of such plan or arrangement as a tax-exempt employee benefit cafeteria plan. Sets forth rules for the tax treatment of contributions to such plans.