FSA Carryover/Grace Period
The carryover feature lets you carry any unused health or limited purpose FSA available balances from the previous plan year into the new plan year up to a certain amount. Check your plan documents for carryover options/requirements and maximum carryover amounts for your plan.
The grace period feature extends the length of time to incur expenses beyond the end of the plan year. Check your plan documents for maximum grace period length.
- The carryover will automatically happen if you have a balance remaining in your FSA on the last day of the plan year.
- During the run-out period you will be able to use your carryover funds for previous or new plan year expenses.
- Previous plan year claims reimbursed during the run-out period will reduce any applicable carryover amount.
- New plan year claims will be paid from the new plan year balance first, then from the carryover balance.
- Funds that carry over do not apply to the new plan year’s FSA maximum.
- Unused funds will carry over even if you do not elect FSA coverage for the new plan year.
- The carryover feature does not apply to the dependent care benefit.
- You can direct your health FSA carryover to the limited purpose FSA in order to preserve HSA eligibility in the new plan year.
- You can opt out of the carryover at open enrollment, if needed.
The carryover is a great feature that reduces your risk of losing unused health or limited purpose FSA balances while taking advantage of a great tax saving benefit.
Health and limited purpose FSA benefits can not offer both carryover and grace period features. Please review your benefits plan document for details.
Grace Period Features
A FSA grace period extends the length of time you can use your FSA funds beyond the end of the plan year.
- For all benefits, health FSA, limited purpose, and dependent care
- Extends up to two and a half months after the end of the plan year
- Review your benefits plan document for provision details