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PEBB webinar explains FSA carryover rules and HSA compatibility
Summary
Navia told employers that FSA and limited-purpose FSA can carry over up to $640 currently (DCAP cannot carry over) and reiterated that FSA use disqualifies HSA participation.
Navia explained that the FSA and limited-purpose FSA will continue to include a carryover feature: ‘‘up to $640 of unspent funds can carry over’’ to the following year, subject to IRS-announced limits. The presenter cautioned that the IRS announces carryover thresholds each fall and the $640 figure may increase.
Navia emphasized the interplay with consumer-directed health accounts: "Participating in an HSA is disqualifying coverage for FSA and vice versa." Employers were advised that if an employee moves from an FSA in 2025 to a CDHP with an HSA in 2026 the carryover will automatically move to a limited-purpose FSA so funds are preserved.
