What happens to FSA funds once the plan year ends?

After the end of a FSA plan year, there is a runout period in which claims can still be submitted for expenses during the plan year. Depending on how the plan was set up and the plan type, some unused funds may roll over to the next year, or there may be a 2.5 month extension.

Runout Period

The 90 day period following the date the plan ends to file claims for expenses incurred during that plan year. This runout period applies to terminated employees or canceled plans, in addition to the end of the plan year.

The runout period can be used for both Health Care and Child & Elderly Care FSAs.

Plan Year

January 1 2018 - December 31 2018

Runout Period End Date

March 31  2019

An employee can ...

submit claims for eligible expenses that occurred during January 1 2018 -December 31 2018.

Plan End Type

A primary administrator must designate plan end types during FSA enrollment. For Health Care FSAs, the administrator can choose either Rollover or 2.5 Month Extension

For Child & Elderly Care FSAs, only the 2.5 Month Extension option is available.

Rollover

A carry-over of excess funds into the next plan year with a maximum of $500. Rollover plan end types can only apply to Health Care FSAs. Employees do not need to enroll for the new plan year if they want to utilize the rollover funds from the previous plan year. 

Plan Year

 August 1 2018-  July 31 2019

Rollover Amount

$500 Maximum

An employee can ...

use up to $500 of the previous plan year (August 1 2018- July 31 2019) FSA funds into the next year. In order to rollover these funds, an employer must enroll in a plan for the current year.

Employees have 90 days to file claims against their full balance for funds incurred before the plan year ends. They can then incur new costs up to $500 (on top of their annual election) in the next plan year.

2.5 Month Extension

A 2.5 month period employees have to use funds from the previous plan year. The 2.5 Month Extension can apply to both Health Care and Child & Elderly Care FSAs.

Plan Year

January 1 2018 - December 31 2018

2.5 Month Extension Period End Date

March 15 2019

An employee can ...

use remaining funds from the previous plan year (January 1 2018 - December  31 2018) until March 15 2019.

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