Workplace Benefits
Does My FSA Roll Over Each Year?
A flexible spending account (FSA) is an account funded with pre-tax money you can spend on office visits, deductibles, copays, prescriptions and more.
If you have unused funds in your FSA, you may be wondering what happens if you’re going into a new year or thinking about changing jobs. Read on to learn how FSA funds carry over.
Do FSAs roll over?
You may think that FSAs have a strict “use-it-or-lose-it” mandate, which means any money left over at the end of the year must be forfeited. This used to be the case. In 2021, the Internal Revenue Service (IRS) amended this provision to allow greater flexibility for rolling over unused funds.1
As a result, employers have one of two options for unused FSA funds. The first is to offer employees a grace period of up to 2.5 months to spend the remaining funds. The other option is to allow participants to roll over a maximum of $610 of unused funds at the end of the year (as of 2023).2
Employers can’t offer both a grace period and a roll over — it’s one or the other.
For example, let’s assume an employer’s FSA plan allows participants to roll over funds up to the limit. If an employee elects to contribute $2,000 for the year but only incurs $970 of qualified medical expenses, they could rollover up to $610 of their remaining funds into the next plan year.
The excess $420 would be forfeited. But if an employer opted for the grace period, the employee would need to use the remaining $1,030 within two and a half months after the plan year ends. Whatever funds remain after the grace period would then be forfeited.
The specific rules for rolling over unused FSA funds differ depending on the type of FSA you have and the rules your employer sets.
Types of FSAs
There are three types of FSAs — healthcare FSA, limited purpose FSA (LP-FSA), and dependent care FSA (DC-FSA).
Healthcare FSAs
A healthcare FSA is a traditional FSA in which you can use pretax dollars to pay for eligible medical expenses, including dental and vision expenses.
With a healthcare FSA, employers have the option to offer a grace period or allow participants to roll over unused funds up to $610 (as of 2023) at the end of the plan year.3
Some plans may not allow either option.
Limited purpose FSAs
A limited purpose FSA is similar to a regular FSA, but you can only use an LP-FSA to help pay for eligible dental and vision expenses. LP-FSAs can be used in tandem with a health savings account (HSA).4
With an LP-FSA, employers have the option to offer a grace period or allow participants to roll over unused funds up to $610 (as of 2023) at the end of the plan year.4
Some plans may not allow either option.
Dependent care FSAs
A dependent care FSA is used to cover qualified medical expenses for children under the age of 13 and for dependents who can't take care of themselves — like elderly parents or children with disabilities.5
With a DCFSA, employers have the option to offer a grace period though some plans may not offer it.5
Things to consider before rolling over your FSA
If you’re thinking about rolling over your FSA funds or taking advantage of the grace period, here are some helpful tips and considerations you may want to know about.
- Set a reminder for reimbursement at the end of the year: You typically have until the end of the year or until March 15 of the following year to spend any unused FSA money and submit receipts.6 It may be a good idea to set a calendar reminder a couple of months or weeks before the deadline.
- FSA rollovers don’t count toward the next year's contribution limits: The amount you roll over doesn’t affect the total you can contribute for the following plan year.7 This means you can elect to contribute the full limit ($3,050 as of 2023) and still go over that amount by how much you rolled over (up to $610 as of 2023).
- You can’t take the money with you if you leave your job: Unlike an HSA, if you leave your job , the money in your FSA doesn’t come with you. It goes to your employer. However, there may be exceptions if you're eligible for the Consolidated Omnibus Budget Reconciliation Act (COBRA) extension.8 Contact your FSA provider to learn if you're eligible for an FSA extension when you leave your job.
- Not every FSA allows rollovers: Employers aren’t required to offer rollovers or grace periods. It’s at their discretion to permit either one. Contact your FSA administrator or HR department to learn what they allow.
Learn about MetLife Health Savings & Spending Accounts
Nothing in these materials is intended to be, nor should be construed as, advice or a recommendation for a particular situation or individual. Participants should consult with their own advisors for such advice. Federal and state laws and regulations are subject to change.
1 “IRS Notice 2021-15” Internal Revenue Service, 2021
2 “IRS provides tax inflation adjustments for tax year 2023” Internal Revenue Service, 2022
3 “Using a Flexible Spending Account (FSA)” HealthCare.gov
4 “How to Use a Limited Purpose FSA (LPFSA)” Investopedia, 2022
5 “What Is a Dependent Care FSA and How Does It Work?” GoodRxHealth, 2023
6 “Does My FSA Have a Grace Period or Roll Over?” FSA Store, 2023
7 “What Is the New Contribution Limit for Flexible Spending Accounts in 2023?” GoodRX, 2022
8 “What Happens to Your FSA If You Lose Your Job or Quit?” Verywell Health, 2023