Open enrollment 2021: You may be able to carryover unused FSA funds of up to $550

Jessica Menton
 
| USA TODAY
COVID-19: Who is unemployed? The unemployment rate explainedJob loss numbers skyrocketed during the COVID-19 pandemic, but not everyone was counted as unemployed. Here’s how the unemployment rate is measured.Open enrollment season is here, which means some you’re running out of time to use their tax-advantaged funds before year-end. If you have a flexible spending account, or FSA, remember that some plans may allow you to carry over slightly more in unused funds for next year. An FSA allows you to pay for many out-of-pocket, qualified medical expenses with pre-tax dollars. This allows you to set aside money that can be used to cover co-pays, deductibles, prescription drugs and other medical costs. Typically, funds must be used by year-end, unless an employer offers a “carryover,” which allows employees to roll over $500 of unused funds to the following year. Or a company may offer a grace period that would extend the use of the funds until March 15 of the following year.An employer may allow either a carryover or a grace period for an FSA, but not both.COVID-19 relief: From extended jobless benefits to student loan reprieve, relief set to fade at year’s endEconomy: COVID-19 vaccine prospects may already be boosting consumer spendingBut in the wake of the COVID-19 pandemic, the IRS made changes to FSA rules this year since some Americans were forced to put off medical expenses during shutdowns. $50 bump in FSA carryoverFor plans that permit the carryover of unused amounts, the maximum amount for 2021 is $550, an increase of $50 from the 2020 carryover limit. The dollar limit for employee contributions to FSAs remains unchanged at $2,750. To be sure, some FSA plans can be “use-it-or-lose it,” which means you have to incur eligible expenses by the end of the plan year or forfeit any unspent amounts. Employers may allow you to carry over up to $550 of unused FSA funds to the following plan year. It is up to your employer, so check with your Human Resources department.

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