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How do the 2020 plan year rule amendments affect my remaining Health Care FSA balance?
Under recent IRS guidance, employers may allow all unspent funds from the 2020 Health Care FSA plan year to be carried over to the 2021 plan year. The State of Michigan has adopted this change. Therefore, any unused funds from your 2020 Health Care FSA will carry over to your 2021 Health Care FSA, rather than the previously established carryover maximum of up to $550.
This change will be configured in HealthEquity WageWorks’ system the evening of March 17, 2021. Prior to that date, their system will reflect the previously established carryover limit of $550 for Health Care FSAs.
Employees are eligible for this carry over to the 2021 plan year if their account was active on December 31, 2020 and either did not enroll for the 2021 plan year or are actively enrolled in the 2021 plan year. Funds may be applied to eligible 2020 expenses submitted by March 31, 2021 or may be applied to 2021 eligible expenses submitted by March 31, 2022.
Remaining 2020 plan year balance information will display in HealthEquity WageWorks’ system as being part of the 2021 account balance after April 15, 2021.