MMA Blog

Changes to Health FSAs - Will you Amend?

On October 31, 2013, the Internal Revenue Service released Notice 2013-71, which allows Flexible Spending Account (FSA) plan participants to carryover up to $500 to the next year plan if the FSA plan does not offer the 2 1/2 month grace period. In this quick reference guide you will find the key highlights of the new provision.

  • Carryover applies to both general purpose and limited purpose health FSAs
  • Amounts carried over from a general purpose health FSA appear to disrupt a participant's HSA eligibility in the year in which the balance is carried over


  • Plan cannot provide a grace period in addition to carryover (one or the other but not both)
  • Plan can provide for a run-out period in addition to the carryover (extends the deadline to submit claims, usually 90 days)
  • Plan can limit the carryover to an amount less than $5oo but $5oo is the maximum
    • Amounts over $500 will be forfeited
  • $500 carryover will not impact the $2,500 maximum election for the following year


  • 2013 Plan Year
    • Can add the carryover provision to 2013 plan years; plan must be amended to remove the grace period prior to last day of plan year (12/31/2013 for 2013 calendar plan year). Special transition relief for 2013 provides that if plan does not have a grace period, the amendment for a 2013 plan year may be made by the end of the 2014 plan year.
  • 2014 Plan Years
    • Amendment to add the carryover provision for 2014 must be done prior to 12/31/2014.
  • Same timing logic for changes in future years.
    • Amendments for that plan year must be done by the last day of the plan year, i.e.; 2015 calendar year plans will have a deadline of 12/31/15


  • Review actual plan balances.  If all balances are less than $500 then adopting the carryover provision could be beneficial. Participants with large balances may already have a plan to use the balance up during the grace period (paid after the plan year).
  • Administrative Impact Carryover has on Run-out Period:
    • Claims incurred in the prior plan year and submitted during the run-out period will reduce carryover amount if carryover amount is under $500
    • Claims paid will need to be monitored carefully to determine the impact on the $500 carryover.

For a printable version of this quick reference guide, click here. 

To access the complete Legislative Update, click here. 

Posted November 08, 2013

Back to All Blog Posts

Recent News

President Trump Issues Executive Order on the Affordable...
President Trump moved swiftly after taking office on Friday, issuing an Executive Order...
Jan 23, 2017 | PDF
EEOC Releases Final Rules for Wellness Programs Under ADA...
On Monday, May 16, the Equal Employment Opportunity Commission (EEOC) released final...
May 24, 2016 | Read Article
HHS Finalizes 2017 Out-of-Pocket Maximums and Marketplace...
On March 8, 2016, HHS published the final version of its 2017 Notice of Benefit and...
May 17, 2016 | PDF
View All News

Get Started Today

Please fill out the fields below.

* Required Information