Health Care Flexible Spending Account Benefits
Amount You Can Elect
If you want to participate in the Health Care FSA, you may elect to contribute up to the annual limit allowed by the IRS (listed below). The minimum annual contribution you may elect is $100 (about $2.08 per pay period). You will be required to make contributions equal to the annual contribution amount you have chosen. An equal portion of the annual contribution amount will be deducted from each paycheck.
| Year | Annual Limit | Pay Period Limit (assuming 48 pay periods per year) |
| 2022 | $2,850 | $59.37 |
| 2023 | $3,050 | $63.54 |
(These amounts generally are adjusted each year by the federal government.)
The full annual amount you elect to contribute to the Health Care FSA is available to you for claims incurred (or paid, for orthodontia claims) at any time during the year. For example, if you elect a $1,200 annual contribution (about $25 per pay period), the full $1,200 is available to you for reimbursement of eligible health care expenses at any time during the year, regardless of the amount that has been deducted from your paycheck so far.
Carryover
Certain unused amounts remaining in your Health Care FSA as of the end of a calendar year will carry over to the following calendar year.
There are three key things to understand about this feature of your Health Care FSA:
- If you have unused amounts, you can carry over to the next plan year a minimum of $100 up to the annual limit allowed by the IRS (listed below).
- During the first 25 days of the new year, the amount you carried over is held in reserve to be used to reimburse only the expenses you incurred in the prior plan year.
- Around January 25 of the new year, any remaining carryover amount will be added to your new plan year contributions, and all those funds will be available to reimburse expenses you incur in the new plan year. For example, if you did not make a new annual election for 2023, carryover dollars from 2022 equal to or greater than $100 and up to $570 were used to create a new annual election for 2023; unused amounts less than $100 were not carried over.
| Carryover Year | Carryover Limit |
| 2022 to 2023 | $570 |
| 2023 to 2024 | $610 |
(These amounts generally are adjusted each year by the federal government.)
Carryovers may not be cashed out or converted to any other taxable or nontaxable benefit and will not count toward the annual contribution limit for the new plan year (e.g., $3,050 for 2023) under the Health Care FSA. If you do not elect to re-enroll in the Health Care FSA for the next plan year but remain eligible for the Health Care FSA, you may use any carryover amount from the previous plan year as described in this summary.
The following examples illustrate how the carryover works without the special provisions noted in the appendix.
Example 1 (How Carryover Increases Available Amount)
This example assumes:
- The carryover limit for Year 1 is $610.
- You elect to contribute $2,500 for Year 2, and
- $800 of your Year 1 election remains unused as of the end of Year 1.
Based on these assumptions, this is what the claims administrator will do:
- Of the unused $800 from Year 1, $610 will carry over to Year 2. The remaining $190 will be forfeited, as required by law.
- During the first 25 days of Year 2, the $610 carried over will be held to reimburse expenses you incurred in Year 1.
- Around January 25 of Year 2, any carryover amounts remaining will be added to your $2,500 annual contribution for Year 2. All those funds will be available to reimburse Year 2 expenses. If none of the $610 was used to reimburse Year 1 expenses, a total of $3,110 will be available to reimburse Year 2 expenses.
Example 2 (Carryover Applied to a New Year’s Claim, without a Contribution Election for the New Year)
This example assumes:
- You do not elect to contribute anything for Year 2,
- $100 of your Year 1 election remains unused as of the end of Year 1, and
- In Year 2, you incur a $2,000 expense in January and file a reimbursement claim on January 31.
Based on these assumptions, this is what the claims administrator will do:
- Your claim will be held until the $100 carryover is applied to your account around January 25 of Year 2.
- At that time, a $100 election will be added for you from the $100 carryover from Year 1, and $100 of your claim will be approved for reimbursement.
Example 3 (Carryover Under $100, without a Contribution Election for the New Year)
This example assumes:
- You do not elect to contribute anything for Year 2,
- $99 of your Year 1 election remains unused as of the end of Year 1, and
- In Year 2, you incur a $2,000 expense in January and file a reimbursement claim on January 31.
Based on these assumptions, because the unused amount is less than the $100 minimum annual contribution, the $99 will be forfeited and the claim will be denied.
Eligible Expenses
You can be reimbursed from your account for eligible expenses that were incurred (or paid, for orthodontia claims) during the year of participation and have not been paid by another health care plan. Eligible expenses are considered incurred when the service is performed, not necessarily when it is paid for. These expenses may be for you or your eligible dependents (i.e., generally those dependents you claim on your federal income tax return).
Eligible health care expenses may include expenses for:
- Yourself,
- Your spouse,
- Any person who is your tax dependent within the meaning of Internal Revenue Code section 152 (without regard to certain limitations on your dependent’s gross income, marital, or filing status under certain Code rules), and
- Your child who has not attained age 27 by the end of the calendar year in which the expense is incurred.
Eligible expenses generally include:
- Copays and other expenses not paid by the Medical Plan or Prescription Drug Plan (or by another health plan, such as one provided by your spouse’s employer),
- Vision care, including contact lens solution as well as any expenses for exams, eyeglasses, or contact lenses not paid by the Vision Plan (or by another vision plan),
- Dental and orthodontia care expenses not paid by the Dental Plan (or by another dental plan),
- Other medical expenses that would qualify on your federal income tax return as being deductible without regard to the 10% limit (subject to certain exclusions such as insurance premiums and long-term care services).
For more information about eligible expenses, see "More Information on Health Care FSA Eligible Expenses."
Expenses That Are Not Eligible
Examples of expenses that are not eligible for reimbursement from your Health Care FSA include (but are not limited to):
- Expenses that are eligible for reimbursement by another plan,
- Cosmetic surgery, except to correct a birth defect, an injury resulting from an accident, or a disfiguring disease, and
- Custodial care.
Health Care FSA vs. Federal Income Tax Deductions
Expenses reimbursed through the Health Care FSA are not deductible on your federal income tax return (that is, you cannot use both methods for the same expenses). Generally, the Health Care FSA provides better tax savings than deductions on your tax return, but you may want to consult a qualified tax advisor.
Terminating Employment During the Plan Year
If your employment is terminated during the calendar year, your active participation in the Health Care FSA will cease on the day your employment is terminated. You will not be reimbursed for expenses incurred after you terminate employment unless you elect to continue your Health Care FSA participation as permitted through continuation coverage under COBRA, as described in the next section. However, you may file claims for any eligible expenses incurred (or paid, for orthodontia claims) while you were employed, until March 31 of the following year.
Continuation Coverage Under COBRA
"Continuation coverage" means your right, or your spouse’s and/or dependents' rights, to continue participation in the Health Care Program if your participation (including your spouse's and/or dependents' participation) otherwise would end. Continuation coverage is not available if you have already submitted claims for the calendar year that are more than the amount you have already contributed.
If you elect continuation coverage, you may be able to continue to make contributions and incur expenses that are eligible for reimbursement, but you will lose any tax advantages for contributions after termination of employment. You may want to discuss your continued participation with your tax advisor. Your right to continue coverage ends on December 31 of the year in which your participation as an active employee ended, even if you have unused amounts that would have qualified for carryover if you had continued to participate as an active employee.
For more information about COBRA coverage, see "Continuing Coverage" in the Health Care Program Participation section.
