If you have a Healthcare FSA balance from the previous year that would be carried over (if allowed by your employer), it can carry over into either a Healthcare FSA or a Limited Purpose FSA (LPFSA).
Carrying over a balance from a Healthcare FSA to an LPFSA usually happens if the account owner enrolls in a high deductible health plan (HDHP) for the new plan year and enrolls in an HSA. Based on IRS regulations, you can’t have both an HSA and a Healthcare FSA, but you can have an HSA and an LPFSA.
Please note that an LPFSA has more restricted eligibility than a Healthcare FSA. However, if your employer doesn’t offer an LPFSA, then any remaining money that would have been carried over will be forfeited under the use-it-or-lose-it rule.
If you have an LPFSA from the previous year and expect to have a balance carry over, and you enroll in a Healthcare FSA for the new plan year, the funds will be carried over to your new Healthcare FSA (if allowed by your employer).
Please note that your employer may also have minimum balance requirements in order to carry your FSA/LPFSA funds over in the new plan year.
What if I don't have an FSA/LPFSA for the new plan year?
If you do not elect an FSA/LPFSA for the new plan year, any remaining balance from the previous year will be forfeited under the use-it-or-lose-it rule.
If you have any questions, please contact the Forma Support team via chat or support@joinforma.com.