The IRS issued new rules allow­ing FSA par­tic­i­pants to car­ry over (with the per­mis­sion of the employ­er) unused amounts up to $500 each plan year. There are con­sid­er­a­tions with regard to simul­ta­ne­ous HSA par­tic­i­pa­tion, how­ev­er, and the IRS has clar­i­fied those rules as well. Now the IRS has made some clarifications:

An indi­vid­ual who is cov­ered by a gen­er­al pur­pose med­ical FSA is inel­i­gi­ble to contribute
to an HSA, even if the individual’s med­ical FSA bal­ance con­sists sole­ly of unused amounts
car­ried over from the pri­or plan year (even if they are exhaust­ed dur­ing the year, the
indi­vid­ual is inel­i­gi­ble to make any HSA con­tri­bu­tion for the year

The indi­vid­ual may con­tribute to a gen­er­al pur­pose FSA if they have an unused bal­ance IF

1) The indi­vid­ual waives or declines a car­ry­over of unused amounts from a gen­er­al purpose
FSA to the sub­se­quent plan year; or

2) The cafe­te­ria plan offers an HSA com­pat­i­ble FSA (lim­it­ed ben­e­fits) and the individual
elects to car­ry over unused amounts to the HSA com­pat­i­ble FSA for the subsequent
plan year; or

3) The cafe­te­ria plan is designed to auto­mat­i­cal­ly enroll those who elect a high
deductible health plan cov­er­age for the fol­low­ing plan year in an HSA compatible
FSA (includ­ing car­ry­over amounts)