What is a flexible spending account (FSA) and how does carryover work?

A flexible spending account (FSA) lets you set aside pre-tax dollars to pay for eligible medical, dental, vision and dependent care expenses incurred by you, your spouse or your eligible dependents. A carryover lets you roll part of an unused balance into next year.

Why choose an FSA

• Take home more money. Putting money into an FSA decreases your taxable income, so you'll take home more money.
• Plan better for health expenses. Spend funds on eligible expenses throughout the year. The IRS "use it or lose it" rule means funds must be spent by year end unless your employer offers a grace period or carryover.
• Flexibility. Use funds for eligible expenses incurred by you, your spouse, or your dependents. Thousands of products and services are FSA eligible. (Eligibility is determined by the IRS.)
• Funds on Day 1. All FSA dollars are available on the first day of the plan year. If you contribute $1,200, deductions spread evenly across your paychecks - but you have access to all $1,200 on Day 1.

Can I enroll?

Yes - as long as you or your spouse aren't actively enrolled in and contributing to a Health Savings Account (HSA).

Contribution limits and IRS rules

The IRS sets the maximum you can elect to contribute to a medical FSA.

Tip: review how much you spend on eligible healthcare expenses each year to decide how much to elect.

Changing your election

To change your election after open enrollment, you must experience a qualifying life event, such as:

• Change in marital status or in the number of dependents
• Increase due to birth, adoption, or marriage
• Decrease due to death, divorce, or loss of eligibility
• Gain or loss of eligibility due to a change in participant, spouse, or dependent employment status

If you experience a qualifying life event, contact your employer to make changes.

Carryover (aka rollover): roll unused dollars into next year

A carryover allows you to transfer a portion of your remaining balance at the end of the plan year into the following year. If you spent less than you anticipated during open enrollment, you can tap into those funds next year.

1. Carryover funds roll into the new plan on the first day of the plan year; the system moves funds automatically during the run-out (claim-filing) period.
2. You can carry over funds while still electing the full maximum annual election in the new plan year.
3. If you have the benefits debit card, it works as normal, using your carryover funds first.
4. Prior-year expenses MUST be submitted manually during the run-out period. Debit cards should not be used for prior-year expenses.

Frequently asked questions

What is an FSA carryover?

A carryover lets you transfer a portion of your unused FSA balance at the end of the plan year into the following plan year, instead of forfeiting it under the IRS "use it or lose it" rule.

Can I have an FSA and an HSA at the same time?

No. You can enroll in a medical FSA as long as neither you nor your spouse is actively enrolled in and contributing to a Health Savings Account.

When can I spend my FSA money?

All of your elected FSA dollars are available on the first day of the plan year, even though the deductions are spread evenly across your paychecks.

Can I still contribute the full amount if I carry money over?

Yes. You can carry over funds while still electing the full maximum annual election in the new plan year.

How do I claim a prior-year expense against carryover funds?

Submit it manually during the run-out period. Do not use the benefits debit card for prior-year expenses.

Can I change my FSA election mid-year?

Only if you experience a qualifying life event, such as a change in marital status, birth or adoption, death or divorce, or a change in employment status affecting you, your spouse or a dependent. Contact your employer to make the change.