Year-End Stimulus Package Provides Relief for Health FSA Participants, Jan. 7, 2021

Health FSAs typically operate under a "use it or lose it rule". As participants know, FSA amounts not used by the end of a grace period following the year-end are typically forfeited. Plans are also permitted to allow a $550 per-year carryover. Under the stimulus package, however, health FSAs and dependent care FSAs can permit participants to carry over any unused amounts from the 2020 plan year into the 2021 plan year. FSAs with plan years ending in 2021 are similarly permitted to allow participants to carry over all unused amounts into plan years ending in 2022. For more information on health FSAs, see Q 3516.