Before you decide to add rollovers to your plan
An overview for employers
Health Care FSA Rollover- A rollover allows Health Care FSA participants to take up to $500 of their previous year’s funds and add them to the new year plan.
Mandatory?- The Health Care FSA rollover is not mandatory. The employer must elect to amend the BESTflex Plan to include the rollover. Once an employer elects to include a rollover in the plan, it will automatically take effect at the beginning of each new year plan.
Implementation Date- The rules went into effect for plan years ending on or after December 31, 2013.
Grace Period- The BESTflex Plan Health Care FSA cannot offer both a grace period and a rollover. The BESTflex Plan Dependent Care FSA is not subject to the rollover and can still provide a grace period even if the Health Care FSA provides the rollover.
Employee/Employer Contribution- Both employee salary reductions and employer contributions can be transferred in a rollover. All dollars subject to the uniform coverage rule are available for rollover.
Rollover Dollars Come Second- Rollover funds can only be used after the dollars from the new year’s plan have been used up.
Other Accounts- The rollover does not apply to the Dependent Care FSA or the Billed Premium Account, only the Health Care FSA or the Limited Health Care FSA.
Accumulation- Rollover dollars cannot accumulate year to year. A maximum of $500 can be rolled over from one plan year to the next.
Multiple Rollovers- If an employer runs a short plan year (January to June) and then renews for a full 12 months, the employer is allowed to provide rollover at the end of each plan year. The amount at the end of each plan year cannot exceed $500.
Plan Termination- If a participant terminates their plan mid-plan year and does not elect COBRA or is not eligible for COBRA to continue the account, the rollover funds are subject to the same rules as other plan dollars. Per the Service Agreement, participants have either the standard 3-month runout period or a different runout period as specified. Any remaining funds after the runout period, including rollover funds, are then forfeited to the employer.