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Health FSA Carryover

Carryover Option (Health FSA only)

illustrations of dental work, childcare, prescriptions, & eyeglasses
Flexible Spending Accounts

Carryover example

The Health FSA program allows you to carry over up to $500 of your unused Health FSA balance from one plan year to the next plan year. You can use these funds for claims incurred through December 31 of the current plan year. (see example)

With the carryover option, you can take advantage of this great pre-tax benefit knowing up to $500, if unused, will still be there for you the following year. You will save an average of 30% when you pay for medical co-pays and deductibles, braces, contact lenses or prescription glasses, chiropractic services, contraception and more (most over-the-counter drugs don’t count unless you get a prescription).


Frequently Asked Questions about the Health FSA Carryover Option. (Print FAQ)

How much can I carry over?
The State of Iowa allows the maximum IRS Health FSA carryover amount of $500.

When are carryover funds made available to me?
January 1 of the following plan year.

Is the carryover benefit automatically applied to my account?
Yes. All current plan year Health FSA participants still employed on 1-1 of the following plan year are eligible to use the carryover option.

Do I need to be enrolled in the next plan year to take advantage of the carryover?
No.  If you are enrolled in a plan year and have a carryover funds, you do not need to enroll for the following plan year to submit claims incurred in the new year.  You must be employed in the new year, but do not need to be enrolled in the plan.

Does the grace period for health FSA still apply?
No.  The carryover option replaced the Health FSA grace period option. Employers cannot offer both options in the same plan year.   

What about Dependent Care FSA claims?
The carryover option does not apply to Dependent Care FSA accounts. The grace period option remains available.

Does the carryover option impact the IRS maximum deduction for Health FSA?
No.  The carryover amount is added to your payroll deduction election for the new plan year. (See example)

If I don’t use my $500 carryover next year, can I carry it over again the following year? 
Yes. The maximum carryover amount of $500, if unused, may be rolled to following plan years.

What happens to any unused funds over $500?
Unused funds over the carryover amount are forfeited to the plan. This amount is determined after the April 15 claim filing deadline.

What claims can be reimbursed with carryover funds?
Carryover funds may be used for eligible expenses incurred in next plan year as long as you remain employed.

What is the deadline for using the carryover funds?
The deadline to incur claims is 12-31 of the new plan year.  The deadline for submitting claims for any carryover funds is April 15 of the following year.

Which funds are used first (current deductions or carryover funds)?
Current year deductions are used for reimbursements prior to carryover funds. Carryover funds must be used in the next calendar year or they will be forfeited.


An employee carries over unused contributions of $500 from plan year 2018 to plan year 2019. He elects to contribute $2,600 in 2019.  His 2018 contributions plus the carryover amount are available for reimbursement of any eligible expenses incurred during the 2019 plan year.

Example 1      
2018 contribution election   $ 2,600
2018 expense claims/reimbursements - $ 2,000
2018 unused funds = $ 600
(2018 unused funds of $600 is $100 over maximum carryover amount of $500 for use in 2018. $100 dollars of 2018 funds is forfeited.)
2018 carryover   $ 500
2019 contribution election + $ 2,600

Funds available for 2019 expenses = $ 3,100
  Example 2      
  2018 contribution election   $ 2,600
  2018 expense claims/reimbursements - $ 2,100
  2018 unused funds = $ 500
  (2018 unused funds of $500 does not exceed the maximum carryover amount of $500 for use in 2018. No funds are forfeited.)
  2018 carryover   $ 500
  2019 contribution election + $ 2,600
  Funds available for 2019 expenses =   $ 3,100