What Happens to Leftover Flex Funds When Going from Flexible Spending Account to HSA?

When transitioning from a Flexible Spending Account (FSA) to a Health Savings Account (HSA), it's important to understand what happens to any leftover funds in your FSA. Typically, FSAs have a 'use-it-or-lose-it' policy where any remaining balance at the end of the plan year is forfeited. However, when moving to an HSA, the rules differ:

1. The funds in your FSA from the previous plan year can be used to pay for qualified medical expenses even after switching to an HSA.

2. You can continue to use your FSA funds until they are exhausted, but you cannot contribute to both an FSA and an HSA in the same year.

3. It's essential to check with your employer or plan administrator for specific details on how the transition will affect your FSA balance and contributions to your HSA.

Understanding the transition from a Flexible Spending Account (FSA) to a Health Savings Account (HSA) can be complex, but knowing what to do with leftover FSA funds is crucial. If you have unused FSA funds at the end of the year, you can still use these funds to cover qualified medical expenses even after the switch to an HSA.