May 12, 2020

IRS Announces Health FSA Carryover Limit Increase

The IRS announced Tuesday May 12th  2020, IRS Notice 2020-33, which increases the carryover limit (currently $500) of unused amounts remaining as of the end of a plan year in a health FSA under a cafeteria plan that may be carried over to pay or reimburse a participant for medical care expenses incurred during the following plan year.

The notice increases the maximum $500 carryover amount for 2020 or later years to an amount equal to 20% of the maximum health FSA salary reduction contribution for that plan year. 

Under this notice, the health FSA maximum carryover from a plan year starting in calendar year 2020 to a new plan year starting in calendar year 2021 is $550.

The full notice can be viewed on the IRS website here.