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Health FSA Carryover, Grace period


Belgarath

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So memory is that you couldn't have both the carryover(rollover) AND a grace period with regard to a health FSA. Then Covid/CAA/etc. came along, and I'm not sure now whether the temporary allowance of rollover if you also had carryover expired, or is it permanent?

Or maybe I'm completely off-base anyway...

Thanks.

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Google is a wonderful thing. 

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/irs-guidance-clarifies-relief-for-fsa-carry-overs.aspx

https://www.flexiblebenefit.com/blog/carryover-grace-period-run-out-period-whats-difference

Can an FSA have a carryover and a grace period?

Health FSAs have an additional option of allowing participants to roll over up to $550 of unused funds at the end of the plan year and still contribute up to the maximum in the next plan year. Health FSA plans can elect either the carryover or grace period option but not both.

There is also potentially a run-out period, different from the grace period, which can be paired with the carry-over if my understanding is correct.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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Yes, the full carryover option from the CAA FSA relief has expired.  

Here's a quick overview:

https://www.newfront.com/blog/2023-health-fsa-limit-increased-to-3050

What About the Carryover Limit into 2024?

The indexed carryover limit for plan years starting in calendar year 2023 to a new plan year starting in calendar year 2024 will increase to $610. 

The $500 carryover limit is indexed at 20% of the maximum health FSA salary reduction contribution for the plan year.  The indexed carryover limit increases in multiples of $10.  The adjustment to $610 (20% of the $3,050 limit) for amounts carried into 2024 represents a $40 increase to the $570 carryover limit in effect for amounts carried into 2023.

Note that the CAA FSA relief provisions permitted employers to offer carryovers of the full unused FSA balance from plan years ending in 2020 and 2021 into the subsequent plan years ending in 2021 and 2022, respectively.  This relief has expired and is no longer available for carryovers into 2023 or carryovers into 2024.

Carryover Limit from a Plan Year Starting in 2022 to a Plan Year Beginning in 2023: $570

Carryover Limit from a Plan Year Starting in 2023 to a Plan Year Beginning in 2024: $610

 

Here's a quick slide summary:

Newfront Office Hours Webinar: 2021 Year in Review

image.thumb.png.1d4d854e16eb5fed2fe916cf1096f778.png

image.thumb.png.acfa6b90a9afc89077d4cb96ea063df0.png

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