FSA

Your FSA: When & What Can and Does Rollover

Contributions to your Flexible Spending Account are done via a pretax, payroll deduction to help offset the costs of some qualified medical expenses. The maximum contribution amounts and deadlines are set by the Internal Revenue Service (IRS). Normally, your Flexible Spending Account or FSA pretax contributions are forfeited at the end of your plan year, typically December 31. Unfortunately, due to the current pandemic, it has become more difficult to properly utilize these accounts. This has led the IRS to change some rules which cover deadlines and rollovers that may benefit you. We here at HPFY can shed some light on these changes and help you maximize your FSA account. 

Traditionally… 

In a normal world, the IRS sets maximum contributions, rollover amounts, and deadlines for those with FSA accounts. Sadly, the last 18 months or so has not been “normal.” The Covid-19 pandemic has turned the world upside down and our healthcare too. Typical FSA contributions/deadlines include: 

• $3050 maximum contribution ($2850 in 2022) 
• $610 rollover limit ($570 in 2022) 
• December 31 claim deadline 

IRS Changes for FSA COVID Relief 

Due to the current pandemic, the IRS has loosened some of these guidelines for employers. While these changes have been made by the IRS, it is your employer who must have decided to offer them to their employees. These changes were enacted due to the Consolidated Appropriations Act (CAA 2021) passed by Congress. These changes included: 

1. Expanded FSA Rollovers: New legislation gave your employer the option to waive your FSA deadline for 2021. This means you may have had the option to rollover all unused FSA contributions into the next plan year. 
2. Increased Grace Periods: Normally when your plan year ends on December 31 a grace period of up to March 15 may have existed. Thanks to CAA 2021, your employer was able to extend this grace period for another 12 months. At the end of the 2022 plan year this will revert back to 2 ½ months. 
3. Mid-Year Expansion: The IRS had allowed employers to open up mid-year FSA changes. This gave participants the opportunity to enroll or dis-enroll as well as add or withdraw funds from their FSA account. 

Here’s a breakdown for the 2023 contribution year compared to 2022 from the IRS.gov website: 

Health Plan Limits	2023	2022
Health FSA Contribution Limit	$3,050	$2,850
Health FSA Carryover Limit	$610*	$570
HSA Contribution Limit (Individual)	$3,850	$3,650
HSA Contribution Limit (Family)	$7,750	$7,300
HSA Catch-Up Contribution Limit (age 55-plus)	$1,000	$1,000
HDHP Minimum Deductible (Individual)	$1,500	$1,400
HDHP Minimum Deductible (Family)	$3,000	$2,800
HDHP Maximum Out-of-Pocket Amount (Individual)	$7,500	$7,050
HDHP Maximum Out-of-Pocket Amount (Family)	$15,000	$14,100

*Special COVID-19 relief gives employers the option to allow employees to carry over their unspent 2021 FSA balance into 2022. 

Employers that offer FSA plans to their employees were granted further flexibility under the Taxpayers Certainty and Disaster Tax Relief Act of 2020. Under this act, FSA plans had additional discretion in 2021 and 2022 to adjust their plans due to un-anticipated consequences of this seemingly un-ending pandemic. The IRS issued Notice 2021-15 which allowed flexibility for employers such as: 

• Flexibility for carryover of unused amounts from 2020-2021 plan years 
• Extension of claims periods for plan years ending 2020-2021 
• Special rule regarding post termination reimbursement from healthcare FSAs 
• Allowing certain mid-year election changes for health FSAs 

These were all great changes by the IRS to allow employers the flexibility to manage their FSA plans, but they were not required to enact any of these IRS changes and ended in 2022. You should talk to your employer or HR department to see what changes they have adopted that can maximize your FSA contributions. 

 

Disclaimer: All content found on our website, including images, videos, infographics, and text were created solely for informational purposes. Our reviewed content should never be used for the purpose of diagnosis or treatment of any medical conditions. Content shared on our websites is not meant to be used as a substitute for advice from a certified medical professional. Reliance on the information provided on our website as a basis for patient treatment is solely at your own risk. We urge all our customers to always consult a physician or a certified medical professional before trying or using a new medical product.