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Health Care Spending Accounts Now Allow $500 Carryover Each Year

A recent change in IRS regulations allows participants to carry over up to $500 of their Health Care Spending Account (HCSA) balance each year. Previously, any unclaimed dollars would be lost or forfeited. This was known as the "Use It or Lose It" rule.

How does this change affect your 2013 and/or 2014 HCSA?

Participating employees who did not use all of their 2013 HCSA money are allowed to carry over up to $500 for the 2014 Plan Year.

All carried over money can be used for eligible expenses incurred in 2014.

The carried over money does not affect your 2014 HCSA contribution. The amount you designated for 2014 contributions will be available for use in 2014 along with any carried amount up to $500.

If you did not enroll in an HCSA for 2014 and you had any unused money at the end of 2013, up to $500 will be available for expenses incurred in 2014.

The deadline for submitting claims has not changed. Participating employees still have until June 30, 2014 to submit claims for expenses incurred in 2013.

After June 30, 2014, any unclaimed 2013 HCSA money in excess of the $500 carryover limit will be forfeited to the County.

This change affects only the HCSA and does not apply to the Dependent Care Spending Account (DCSA).

The following questions and answers can help make sense of the change:

Q: May I use my 2013 carry over balance for 2014 expenses?
A: Yes. Your 2014 elected amount will be used first, but once it is used up, you can use up to $500 of your 2013 balance for 2014 expenses.

Q: May I still submit claims for the 2013 plan year until June 30, 2014?
A: Yes. The “run out period” deadline has not changed. You may gather your receipts and submit claims for 2013 expenses (it’s easiest to do it on mylacountybenefits.com) until June 30, 2014.

Q: I did not enroll in an HCSA for 2014, but I had money left over in my 2013 account. May I still submit claims for the 2013 plan year?
A: Yes. If you had dollars left over in 2013, you can submit claims for 2013 expenses through the end of the run out period (June 30, 2014). After that, up to $500 will be available only for expenses incurred in the 2014 plan year.

Q: What happens if I have more than $500 in my 2013 account at the end of the run out period (June 30, 2014)?
A: You will lose the amount over $500. It will be forfeited to the County. The remaining $500 remains available for expenses incurred in 2014.

Q: Can I transfer my 2013 HCSA balance over to my 2014 Dependent Care Spending Account (DCSA)?
A: No. The HCSA and DCSA are two separate accounts and you cannot transfer money between the two.

Check iafflocal1014.org or local1014.org for details