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Board approves $500 health FSA carryover after staff recommendation
Summary
The San Francisco Health Service Board approved allowing employees to carry forward up to $500 in health flexible spending accounts, adopting staff recommendation that forfeitures will cover administrative costs for several years and directing communications to members.
The San Francisco City Health Service Board voted unanimously to allow employees to carry forward up to $500 in health flexible spending accounts (FSAs), adopting a staff recommendation grounded in new IRS guidance.
Deputy Director Pamela Levin told the board the IRS issued guidance in October that permits employers to allow a $500 carryforward for health FSAs. Levin said the board’s options included the current 90‑day run-out, a grace period (which the staff avoids because of administrative burden) and a carryforward. Levin recommended combining a run‑out with a $500 carryforward and said current forfeiture balances and estimated experience make the recommendation sustainable in the near term: “We have sufficient forfeiture amount to be able to pay for the administrative costs for somewhere around 5 years,” Levin said.
The board discussed administrative impacts, noting WageWorks — the third‑party administrator — charges approximately $4.30 per member per month. The staff said increased enrollment and carryforward balances would reduce forfeitures and could eventually require the plan to bill members for administrative costs if forfeitures fell short.
Retiree Claire Zvonski, speaking during public comment, urged caution on timing because open enrollment had already closed: “Open enrollment has passed and members have made decisions with regard to their FSAs… people might want that opportunity to re‑up,” she said. Staff responded that regulations do not permit reopening open enrollment but that WageWorks and HSS would communicate carryforward options under the run‑out period.
After discussion, a commissioner moved to approve the staff recommendation and another seconded. The motion passed unanimously.
The board said staff will update the cafeteria plan document to reflect the carryforward decision and will monitor the program annually to ensure forfeitures continue to cover administrative costs. Communications to members will be coordinated with WageWorks and internal benefits materials.
