Are Flexible Spending Arrangements still subject to the "use it or lose it" rules of Sec 125 ?

A few years ago, Congress proposed HR 63 and HR 167 which (if passed) would have allowed participants to cash-out (as taxable income) their unused FSA account balance (at the end of the plan year) .... or carryover their unused account balance to the next year.

What ever became of HR 63 and HR 167 ?

They never made it out of committee.
http://thomas.loc.gov/cgi-bin/bdquery/z?d1...d107:h.r.00063:
http://thomas.loc.gov/cgi-bin/bdquery/z?d1...d107:h.r.00167:

Use it or lose it still applies at this time.