MMC Benefits Handbook
Only Applicable for Carryovers from the 2020 Plan Year into 2021 and the 2021 Plan Year into 2022
Can I carryover any 2021 plan year Dependent Care Flexible Spending Account balance?
Yes, the carryover feature for the 2021 plan year will allow your unused balance (up to the plan maximum) to be carried over from your Dependent Care Flexible Spending Account for use in the 2022 plan year.
How does the carryover work?
Any claims for eligible expenses incurred in 2021 that are submitted between January 1, 2022 and March 31, 2022 will be reimbursed from your unused 2021 balance. Up to 100% of your remaining unused 2021 account balance will be available on March 1, 2022 for eligible expenses incurred in 2022.
- In November 2021, you elect to contribute $2,500 to a 2022 Dependent Care Flexible Spending Account.
- On December 31, 2021, you have a balance of $800 in your Dependent Care Flexible Spending Account.
- On January 1, 2022, $800 will carryover from your 2021 Dependent Care Flexible Spending Account, giving you a combined balance of $3,300 for 2022 ($2,500 + $800).
- In March 2022, during the run-out period, you submit a claim for $350 for eligible expenses incurred in 2021.
- Your 2021 Dependent Care Flexible Spending Account carryover balance is reduced to $450 ($800 minus $350).
- If no other 2021 claims are submitted by March 31, 2022, the $450 balance will be the remaining carryover balance in your 2022 Dependent Care Flexible Spending Account.
- You have $2,950 available for reimbursement in 2022 ($2,500 plus $450).
- You incur $2,700 in eligible expenses on July 15, 2022 and submit a claim for reimbursement.
- You are reimbursed for the $2,700 claim ($2,500 from your 2022 Dependent Care Flexible Spending Account plus $200 from your 2021 balance that was carried over).
- Your 2022 balance is now reduced to $250 ($2,950 minus $2,700).
- If no other 2022 claims are submitted by March 31, 2023, your $250 Dependent Care Flexible Spending Account balance will be forfeited.
- Based on the current plan terms and applicable law, for the 2022 plan year (and subsequent plan years), after March 31, 2023, any 2022 balance will be forfeited at that time.
Does the carryover impact the amount I may contribute to the Dependent Care Flexible Spending Account in subsequent years?
No. The 2021 carryover (up to the plan maximum) does not affect the maximum amount of contributions that you may contribute to your Dependent Care FSA. You may contribute up to the maximum amount each year, regardless of whether any amount is carried over from the prior year. The maximum contribution amount for 2021 is $5,000.
Do I have to elect to contribute to a Dependent Care FSA in the 2022 plan year for the carryover funds?
No. If you do not elect a Dependent Care FSA in the 2022 plan year, a Dependent Care FSA will be established for you for the carryover funds.
What is the deadline for using the carryover funds in 2021 and 2022?
You have until December 31 of the plan year into which funds are carried over (i.e., carryover into 2021 plan year and carryover into 2022 plan year) to incur eligible expenses. The deadline to submit claims is March 31 of the following year.
For example, your unused carryover balance is $550. The $550 is carried over from 2020 to your 2021 Dependent Care Flexible Spending Account. You have all of 2021 to incur expenses and submit claims against any 2021 election amount plus the 2020 carryover funds. You then have until March 31, 2022 to submit claims for reimbursement for claims incurred in 2021.If you have an unused balance on December 31, 2021, the unused plan balance (up to the plan maximum) will carry over to 2022 and is available to use for eligible expenses incurred in 2022.
How can I get a copy of IRS Publication 503?
Go to www.irs.gov and enter "503" in the "Search" box for more information about reimbursable dependent care expenses.
You may also contact the Claim Administrator for information about reimbursable dependent care expenses.