Q.- What is a carryover and what is a grace period in a health flexible spending account plan?
A.- A health FSA with a carryover option allows a participant to carry forward up to $500 of unused FSA contributions to be used for medical expenses incurred in the next plan year. A health FSA with a grace period allows a participant to access unused amounts remaining in the account at the end of the plan year to reimburse expenses incurred during a period of up to 2-1/2 months after the end of the plan year. A health FSA may have a carryover option or a grace period option, but not both.
