Health Care FSA Carryover FAQ

The IRS modified the health care FSA "use it or lose it" rules to allow you to carryover up to $550 in unused funds from one year to the next. This amount increased by $50 in 2020.

Example: if you are enrolled in a health care FSA this year, after you have submitted all of the eligible expenses you have incurred for this year, you may be able to carryover up to $550 of any funds remaining in your FSA into the next calendar year.

No. IRS rules do not allow you to carryover dependent day care FSA funds.

No. The carryover will not count toward the annual contribution limit, posted annually on Cardinal at Work. You may still choose to contribute up to the limit for the new plan year even if you carry over $550 from the previous year.

You are eligible to receive the carryover funds automatically as long as you are an active benefits-eligible employee and eligible to participate in the health care FSA on the day the funds are carried over to the new plan year’s health care FSA.

If you terminate employment or are no longer eligible to participate in the health care FSA, normal termination rules will apply and any carryover balance may be forfeited.

Example: You are an active benefit-eligible employee with a health care FSA. On June 1, your job changed and you are scheduled to work less than 50 percent time, which means you are no longer considered a benefits-eligible employee. Any eligible expenses you incurred through May 31 can be submitted for reimbursement. You still have until April 30 of the following year to claim those expenses, but any monies left over will be forfeited.

• Employees have until December 31 to incur eligible expenses for reimbursement from their health care FSA.
• The last day to submit a claim for reimbursement is April 30 of the next calendar year.

• Up to $550 of the unused balance left in the previous year’s health care FSA may be carried over after all disbursements are final.

There are two ways within the TASC website ( partners.tasconline.com/stanford ) to move your carryover funds.

Carryover Now button (manually move): The Carryover Now button is a feature on the TASC website. This allows you to “move” or “carryover” a balance of $550 or less to the next plan year. This is a feature over which you have control, and can be used after you’ve submitted all of your eligible expenses from the plan year for reimbursement. The funds will show in the Carryover and Available Balance section. Note: Once you press that button the funds cannot be moved back to the previous plan year.

Carryover balance (automatically move): April 30 is the last day for reimbursement for the previous plan year. After April 30, any unused balance up to $550 will automatically carryover to the new plan year’s health care FSA and will show in your Carryover and Available Balance section in mid-May.

Example: If you contributed the maximum of $2,700 to your health care FSA, but you only claimed $1,700 of eligible expenses by December 31, you have until April 30, to request additional reimbursement for $1,000 of eligible claims, if they were incurred by December 31.

If you don’t claim the remaining $1,000 unused balance, $550 may be carried over. You may manually move it to the next plan year using the Carryover Now button, or you may wait until the April 30 deadline has passed and the carryover will move automatically by mid-May. In either case, the extra $450 balance is forfeited.

After mid-May you can login to the TASC website to view your FSA account information and the carryover balance. The carryover balance will be added to your Available Balance and will appear in the View Account Overview window. You will see your Account Election, plus any Carryover funds, minus Total Reimbursements and your total Available Balance.

Yes. If you do not re-enroll in a health care FSA during Open Enrollment, your annual election amount will be $0; however, the Carryover field and Available Balance will populate with the carryover amount, either when you move the funds with the Carryover Now button or when the carryover balance moved automatically in mid-May. These funds will be available to you and may carryover again as long as you remain a benefits-eligible active employee and eligible to participate in a health care FSA.

The IRS “use-it-or-lose-it” rule applies to balances of more than $550. To avoid forfeiting any monies, it is important to spend down your account by December 31. After April 30, you lose any money left in your health care FSA that is more than the maximum carryover limit. Forfeited funds are not returned to you or transferred to another account—this follows IRS rules.

Example: You have $1,000 in unused balance from your health care FSA, as of April 30. Only $550 of the remaining $1,000 will carryover in mid-May 2020. The remaining $450 is forfeited.

If you enroll in a Health Savings Account (HSA), you are not eligible to also have a health care FSA. If you are currently enrolled in the health care FSA and decide to enroll in the high-deductible health plan with an HSA during Open Enrollment for the upcoming year, you must spend down your health care FSA balance to zero by December 31, otherwise you forfeit your balance, which would include the carryover balance. IRS rules will not allow you to contribute to an HSA if you are enrolled in the health care FSA.

If you incur expenses before the carryover funds are credited to your account, you will use your annual election for the new plan year before being reimbursed for any claims from the carryover funds from the previous plan year.

Example – waiting until April 30 for your carryover to automatically move: You elected to contribute $1,000 to your FSA during Open Enrollment. In January, you incur medical expenses in the amount of $780. That $780 would be deducted from your $1,000 annual election. You will still have $220 remaining in your Available Balance. As of April 30, you had $400 from the previous year that you had not used. The $400 is the carryover balance and will be added to the $220 that remains from the new annual election. The carryover funds and the remaining balance are blended and show the Available Balance as $620. You will need to re-submit a claim for any unreimbursed amount after your carryover funds credit to your FSA account. You may also use your debit card to access Available Balances including any carryover funds once they are available.

Example – using the Carryover Now button: Using the same scenario as above, you elect to contribute $1,000 to your FSA during Open Enrollment. As of January 1, you have $400 unused from the previous year. Although you have until April 30 to submit expenses from the previous year, you find that you do not have any additional expenses to submit. You press the Carryover Now button in the beginning of January and the $400 from the previous year immediately moves to the current year, showing in the Carryover and Available Balance field. You now have a balance of $1,400 in your FSA. Later in January, when you incur medical expenses, you can use the full $1,400 Available Balance in your account.

If you submit a claim that exceeds your current health care FSA elected annual amount before any carryover funds credit to your account (i.e. If you did not use the Carryover Now button), you will only be reimbursed up to your current elected annual amount. You would then need to re-submit a claim for any unreimbursed amount after your carryover funds are credited to your FSA (in mid-May). You may also use your FSA debit card to access the carryover funds once they are available.

If you terminate employment, termination rules will be applied to the health care FSA. If applicable, you will be offered COBRA to continue your health care FSA. See the Flexible Spending Account Summary Plan Document on Cardinal at Work for further information about COBRA.

Whether or not you enroll in COBRA, you can submit claims for eligible expenses through April 30 following the end of the plan year in which you terminate employment, as long as the service date(s) are on or before the end of the month in which you terminate, or if later, the date your COBRA coverage terminates.

• If carryover funds have already been credited to your Available Balance before you terminate, then the Available Balance is available to reimburse you for eligible expenses.
• If carryover funds have not been credited before your termination date, then the carryover funds will only be available if you are eligible to enroll in and pay for COBRA.

Example – You terminate in November: If applicable, you may be offered COBRA to continue your health care FSA. If you elect COBRA and make contributions through the end of the year (December 31), claims must be submitted by the following April 30. If there is a remaining balance of $550 or less left in your health care FSA after April 30, the balance is carried over to an FSA for the new year. You may continue to use the funds until they are exhausted or until the COBRA period is exhausted, whichever comes first.

Example – You terminate before mid-May: You enroll in a health care FSA in 2019 and also enroll in a health care FSA for 2020. You would have until April 30 to claim reimbursement for any expenses incurred through 2019. If you terminate before mid-May in 2020, then you must incur expenses through the end of the month in which you terminate to access your 2020 account with any 2019 carryover. Otherwise, if COBRA is offered, you can continue to participate in your health care FSA.

• Note: In this case, for you to be eligible for the carryover, you must be offered and elect COBRA to remain active in the 2020 health care FSA. If you are active and contributing to COBRA when the carryover is determined, any carryover balance of $550 or less adds to your Available Balance. Then, as long as you remain active through COBRA, you will have access to the Available Balance. If you terminate COBRA, any balance is forfeited.

Example – You terminate after mid-May: You enroll in the health care FSA in 2020 and elect $1,500; in addition, you have a carryover balance from 2019 of $200, which was added to your Available Balance for a total of $1,700. Your termination date is July 31, 2020. If the Available Balance at the time of your termination is $1,000, in order for COBRA to be offered, your health care FSA contributions year-to-date must be higher than the amount that has already been reimbursed year-to-date. Your health care FSA contributions to date equal $875; total reimbursements are $500. Since the amount contributed year-to-date is higher than the total reimbursements year-to-date, COBRA would be offered. You would need to elect and pay your COBRA contributions in order to keep the health care FSA active. If you terminate COBRA, any balance remaining in your Health Care FSA will be forfeited.

If you had the carryover balance of $200 added to a 2019 health care FSA but did not enroll in an FSA for 2019, COBRA would not be offered and the carryover balance would not be available after your termination date of July 31, 2020.