Benefits Healthcare FSA with Carryover FAQ’s

To find out if you have a Healthcare FSA with Carryover, log into your Kazdon account or ask your employer.

The carryover option is available with a Healthcare FSA and an HSA-Compatible FSA. It is not available with aDependent Care FSA.

Your funds will be available on the first day of the new plan year. The amount that's carried over is determined at the end of any run-out period for the previous plan year.

Good news! No. You can still contribute up to IRS maximum contribution limit (or the limit set by your employer) even if you carry over the allowed annual IRS carry over limit from the previous plan year.

Sorry, your employer can only offer a Healthcare FSA with a grace period OR the carryover option during the same plan year—not both.

Your employer can choose to allow a carryover of any amount up to the allowed annual IRS carry over limit per participating employee per plan year. Kazdon encourages all employers to allow the maximum the allowed annual IRS carry over limit carryover amount.

Your carryover balance is available to you on the first day of the new plan year. You do not have to make a new contribution election for the new plan year to receive the carryover funds.

If you don’t re-elect a Healthcare FSA, your employer may make some options available to you, including:

· Your carryover balance may be defaulted to a Healthcare FSA for the new plan year automatically; or
· Your carryover balance may default to an HSA-Compatible FSA; or
· You may forfeit your previous plan year balance rather than carry it over to the new plan year.

Ask your employer which option applies to you.

No. If you are eligible for the carryover (if you have a carryover balance and did not forfeit the carryover), you will have the available carryover balance transferred into the following plan year as an adjustment—with the same coverage (limited or standard) unless your employer directs otherwise.

The current plan year will pay first and the carryover plan will pay second. You get the best use of your funds by having the current plan year pay first, and the previous plan year pay second.

A Letter of Medical Necessity is the same as a Doctor’s Statement. It's a letter written by your doctor, verifying that the medication you are buying with your Healthcare FSA is for a diagnosis, treatment, or prevention of a disease. This letter is required by the IRS for certain eligible expenses. Review the list of eligible expenses to see if you need a Letter of Medical Necessity for a particular type of expense. Download the Letter of Medical Necessity form.

Great news! Funds may be carried over indefinitely. There is no time limit. Keep in mind that your employer may choose to limit the years that carried over funds can be accessed. For example, if you have unused funds from Plan Year 1, you make no election in Plan Year 2, and you don’t submit any claims for Plan Year 1, your employer may choose to have the unused amounts of Plan Year 1 expire at the end of the Plan Year 2. Ask your employer if there are any limits to how long your unused funds may carry over from one plan year to the next.

Sorry, we can’t be too specific about this answer because it depends on your employer's Healthcare FSA program. Often employers offer a period of time when you can still submit claims so you can spend down funds remaining in your Healthcare FSA. You may also be able to extend the period of time to use your Healthcare FSA funds if you elect COBRA after you leave your job. But please keep in mind that you need to incur all eligible expenses before your last day of work. We recommend asking your employer about your options.

Sorry, carryover balances are nontransferable. You must be an active participant on the last day of the plan year in order to have funds carried over to the next plan year.

Yes, the the allowed annual IRS carry over limit carryover option is available for any Healthcare FSA contribution level your employer elects.

No. If you don’t re-enroll in a Healthcare FSA for the new plan year, but you still have funds remaining in your account to be carried over, you will be automatically re-enrolled in a Healthcare FSA for the new plan year with an election amount of $0.

No. If any funds remain in your Healthcare FSA at the end of the current plan year, you carry over up to $500 into the subsequent year, indefinitely. Your carryover balance can be used at any time for expenses incurred in the new plan year (in addition to the elected payroll deductions).

Log into your Kazdon account. Your account balance, including your carryover balance, and other important account information will show up in a pop-up window. This window will pop up each time you log into your Kazdon account before the plan end date. Once the new plan year begins, Kazdon will send you information about your new year plan account.

If your employer offers a Healthcare FSA with Carryover, you should elect an HSA-Compatible FSA for the new plan year so you can carry over up to the allowed annual IRS carry over limit and contribute to an HSA to maximize your savings. If you don’t enroll in an HSA-Compatible FSA, you forfeit the remaining balance in your Healthcare FSA.