Health FSA Carryover Indexed; Limit Increased to $550 for 2020 Plan Year


In addition to the temporary relief measures put in place during the COVID-19 pandemic, there have been a few recent permanent changes that FSA participants will also find beneficial. The repeal of the OTC prescription requirement was one of these (see our post on that topic). Another is the increase and indexing of the maximum Health FSA carryover amount. For the 2020 plan year, the maximum Health FSA carryover has been increased to $550. This new maximum applies to amounts that can carryover from your plan year beginning in 2020 to your plan year beginning in 2021. The maximum carryover is now indexed at 20% of the IRS Health FSA maximum election amount ($2,750 for 2020) and will increase accordingly as the maximum election increases in future years. We will continue to notify you anytime the maximum carryover increases in the future. Your plan must allow carryover and adopt an amendment to take advantage of this update. If your plan chooses not to adopt the amendment, or if your FSA does not have carryover or utilizes the end-of-year grace period, this change will not impact your plan. If you have questions about this change, please contact us.