FSAFEDS to allow carryover of funds

The Office of Personnel Management announced key changes to rules for FSAFEDS health care flexible spending accounts (FSAs).

First, the minimum election for all FSA accounts has been lowered from $250 to $100 for 2015, a move anticipated to draw more participants into the program.

Second, employees with health care and limited expense health care FSAs for the first time will be able to carry over up to $500 in funds from one year to the next, beginning with the 2015 benefit period; that is, employees enrolled in those FSAs next year will be able to bring up to $500 of unspent funds from 2015 into 2016, and use those funds to reimburse eligible expenses incurred in 2016.

Employees must re-enroll for the 2016 benefit period to be eligible for the carryover.

According to the FSAFEDS website, the new carryover feature also brings other changes to health care FSAs. Beginning with the 2015 benefit period, there will no longer be a grace period for incurring health care expenses—all eligible expenses must be incurred between Jan. 1 and Dec. 31, 2015. The deadline for submitting claims remains unchanged—April 30 of the following year.

This grace period change will not effect the 2014 benefit period, so the grace period will remain in place for 2014 health care FSA accounts, allowing participants to incur eligible expenses through March 15, 2015.

The carryover change does not affect dependent care FSAs, the website notes, so those FSAs will continue to have a grace period that extends through March 15. OPM noted that under the law dependent care FSAs cannot use carryover.