How does Carryover differ from a Grace Period for the Health Care FSA?

Carryover will allow you to roll over up to $550 of your remaining Health Care FSA balance from plan year 2021 into a plan year 2022 Health Care FSA, after all eligible claims have been submitted by the March 31, 2022 run-out deadline. Unlike a Grace Period, you have the entire year to spend the amount of the Carryover.

The State of Michigan will continue the Grace Period for the Dependent Care FSA, which is January 1st through March 15th, following the end of a plan year on December 31st. Balances remaining in the Dependent Care FSA may be used to reimburse eligible expenses incurred during this period or in the prior year. Claims must be submitted by March 31, 2022 to be applied to 2021 account balances or they will be forfeited.

There is no Grace Period for the 2021 Health Care FSAs, as the IRS allows employers to provide a Grace Period or a Carryover for a Health Care FSA, but not both.