Skip to main content

Plan Year 2020 & 2021: Health Care FSA with Carryover

FSA with Carryover

Update - PY20 & PY21 IRS FSA Amendment: Under Internal Revenue Service guidance, employers may allow all unspent funds from the 2021 Health Care Flexible Spending Account (HC FSA) plan year to be carried over to the 2022 plan year. The State of Michigan has adopted this change. Any unused funds from an eligible employee's 2021 HC FSA will carry over to a 2022 HC FSA, rather than the previously established maximum of up to $550.

Eligibility for this carryover to the 2022 plan year is based on 2021 accounts being active as of December 31, 2021 and an employee either not enrolling in a HC FSA for the 2022 plan year or the employee maintaining active enrollment in a 2022 plan year account. Funds may be applied to 2021 expenses submitted before March 31, 2022 or may be applied to 2022 expenses submitted before March 31, 2023.

Remaining 2021 plan year balance will display in HealthEquity WageWorks' system as being part of a 2022 account balance after April 15, 2022. There is no action required by employees to initiate this carryover. Even if an active employee did not re-enroll in a HC FSA for the 2022 plan year, the 2021 plan year carryover funds will be available for the remainder of the 2022 plan year.

Note: This is a temporary change in response to the COVID-19 pandemic, and not a permanent implementation of unlimited carryover for HC FSAs. For additional information about this temporary provision, please contact HealthEquity WageWorks at 877-924-3967. For additional FSA plan information, the review PY21 FSA Plan Booklet.

PY20 & PY21: Health Care FSA with Carryover

  • Yes. Employees may carry over up to $550 of unused Health Care FSA funds into the following plan year.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • 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.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • The run-out period allows additional time to submit requested documentation to substantiate your prior plan year FSA claims. The State of Michigan’s run-out period ends on March 31st, meaning you have until March 31st to submit requested receipts and documentation for the prior plan year.

  • The Carryover amount is available to pay 2021 expenses during the 2021 plan year run-out period (through March 31st, 2022) and 2022 expenses after your 2022 election amount has been exhausted. Expenses incurred during the 2022 plan year will pay first from your 2022 account balance, and any Carryover from 2021 will pay second. 

  • If you do not re-enroll in a Health Care FSA and have a remaining balance, you may carry over up to $550 for one year. If you do not re-enroll after one year, the balance is forfeited. However, if you do re-enroll after one year, those funds can continue to carry over.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • The WageWorks Health Care FSA Card cannot be used to pay for expenses from the previous plan year. You must submit previous year’s claims using the Pay Me Back or Pay My Provider claim forms during the runout period by following either of the steps below:

    1) Pay Me Back Claim

    Submit a Health Care FSA Pay Me Back Claim online by logging into your account at www.wageworks.com and selecting Submit Receipt or Claim. You also have the option to mail or fax a claim form to WageWorks.

    2) Pay My Provider

    Use this payment option to submit a claim to make a payment directly to your provider; log in to your WageWorks account and click Submit Claim or Receipt > Pay My Provider (for Health Care) and then follow the instructions. You can request a one-time payment or recurring monthly payment for eligible services (e.g., chiropractic, orthodontia, etc.).

  • No. If you are eligible for the Health Care FSA Carryover (if you have a remaining balance and did not forfeit the Carryover), you will have the available Carryover balance transferred into the current plan year as an adjustment - without impacting your current plan year election.

  • No. You can still choose to contribute up to the yearly maximum even if you carry over a balance from the previous plan year. Carryover funds are in addition to the maximum federal cap on salary reduction elections.

  • The State of Michigan has chosen the Carryover maximum. This allows a Carryover of any amount up to $550 per participating employee per plan year.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • Funds may be carried over indefinitely if you remain enrolled in the Health Care FSA plan. If you do not re-enroll for the next plan year, you are able to carry over up to $550 for one year, but if you do not re-enroll for two consecutive years, you will forfeit any remaining Carryover funds.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • If you elect COBRA continuation of coverage for your Health Care FSA, you may use any remaining funds in the FSA during the current plan year. You may use up to $550 of carryover funds to pay qualified expenses incurred during the next plan year, limited to the applicable COBRA continuation period. If you do not elect COBRA continuation of coverage, Health Care FSA carryover funds are non-transferable, and you cannot carry over any health care FSA funds to pay qualified expenses incurred in the next plan year. Funds will be forfeited if not submitted by the "Claim It By" Date for expenses incurred prior to the plan year end date. You must be an active participant or COBRA beneficiary on the last day of the plan year in order to have funds carried over to the next plan year.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • No. Employees rehired or recalled within 30 days of their departure and within the same plan year who had a Health Care FSA must maintain their original Health Care FSA Annual Goal elected unless there is a qualifying life event.

    There will be no lapse in coverage; contributions will be re-calculated, and your Health Care FSA Carryover balance will not be affected.

  • No. If you do not actively enroll in a Health Care FSA for the next plan year, but you still have funds available to carry over (up to $550), you will be automatically enrolled in a Health Care FSA for the new plan year but your election amount will be set to $0 prior to the carry over occurring.

    You are only able to carry over funds for one year if you do not re-enroll in a Health Care FSA.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • No. The Carryover funds can be used at any time for expenses incurred in the new plan year (in addition to your new plan year elections). If any funds remain at the end of the current plan year, up to $550 is carried over into the subsequent year.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • WageWorks displays a pop-up window when you log in to your online WageWorks account that explains the Carryover feature, timing, and any options that may be available to you. This pop-up will show each time you log in before the plan year end date. Once enrolled in a new plan year that supports your Health Care FSA Carryover funds, you will receive all the standard communications regarding the new plan year account that you received during the previous plan year as an active, contributing participant.

  • Yes. Those funds would carry over to a Limited Purpose Health Care FSA, up to the carryover limit for the plan.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • Those funds, up to the carryover maximum of $550, would be carried over to a LPHC FSA for plan year 2022. If you do not enroll in an HDHP with HSA for plan year 2022, you could enroll in a GPHC FSA to ensure the 2021 carryover funds are placed in the 2022 GPHC FSA. If you don’t re-enroll in a HCFSA for plan year 2022, you can contact WageWorks to request that the carryover balance be transferred to a GPHC FSA effective January 1, 2022.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • The funds will carryover to a LPHC FSA, up to the limit set by the plan. The system will automatically update the HCFSA to limited purpose based on 2022 HSA contributions being received.  

    The contributions sent to the HSA would trigger the change to convert the General Purpose Health Care FSA to the Limited Purpose Health Care FSA.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.

  • Yes. In this scenario, if the HDHP with HSA enrollment took effect January 1, 2021, the GPHC FSA carryover amount would transfer to an LPHC FSA. WageWorks’ system will automatically update the GPHC FSA to LPHC FSA plan based on the 2021 HSA contributions being received.

    Note: Please review the information at the top of the page regarding the temporary allowance of unlimited Carryover of PY20 and PY21 funds, due to an IRS amendment.