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Health FSA Carryover Option

Carryover Option (Health FSA only)

You may carry over up to $500 of unused Health FSA contributions from one year to the next. Any unused carryover amount may be rolled to following years, not to exceed the maximum carryover limit of $500 (see example).  The Health FSA grace period was replaced with the carryover option in 2015.

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 in following years, as long as you remain employed by the State. You will save an average of 30% when you pay for medical co-pays and deductibles, braces, contact lenses or prescription glasses, chiropractic services, prescriptions 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 annually.

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 Health FSA plan 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 will have carryover funds, you do not need to enroll for the following plan year to submit claims incurred in 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.   

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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. You must remain employed to submit claims for carryover funds.

What happens to any unused funds over $500?
Unused funds over the carryover amount are forfeited to the plan. The 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 future plan years, as long as you remain employed.

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Carryover Example (Health FSA only)

An employee carries over unused contributions of $500 from plan year 2016 to plan year 2017. He elects to contribute the maximum of $2,550 in 2017.  His 2017 contributions plus the carryover amount are available for reimbursement of any eligible expenses incurred during the 2017 plan year.

2016 contribution election (maximum allowed)
$  2,500
2016 expense claims/reimbursements
$ -2,000
2016 unused contributions   $     500
2017 contribution election
$  2,550

Carryover funds available for 2017 expenses
$ 3,050





illustrations of dental work, childcare, prescriptions, & eyeglasses

Flexible Spending Accounts

Carryover example