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Balance vs. Claims Carryover


One of the great features of the myHSA platform is the ability to tailor the solution to meet the unique needs of each organization.


In this article, we’ll explain the different options available to allow plan members to carry forward unused funds, or use this year’s funds to pay for an expense incurred in the last benefit period.


Balance Carryover: As a plan sponsor, you have the option of allowing employees to carry forward any unused benefit amount from the previous plan year for a maximum of one year. For example, an employee may have $250 remaining from the 2024 plan year. If they received another $500 on January 1st, they would have $750 to spend in 2025.


As this employee submits claims against the $750 available to them, the first dollars used would be the $250 from the 2024 plan year. If they never used any of the $750 in 2025, the 2024 balance amount would drop off in 2026.


When balance carryover makes the most sense:

  • When annual allocations are small relative to your organization’s cashflow, we recommend allowing employees to carry forward unused funds. This allows them to plan for larger planned expenses like buying a pair of glasses or significant dental work.

  • When your HSA is supplementing a core insured plan – typically these balances are smaller than when the HSA is used to provide all benefits.

  • When your organization is comfortable with cash reserves and can deal with the larger liability accruing in the HSA if employees don’t submit claims promptly.

  • For Flex accounts, taxable wellness accounts, or when allocation amounts are significant, plan sponsors typically opt for any unused balance to be forfeited at the end of the plan year.


Claims (Expense) Carryover: When unused funds are forfeited at the end of the plan year, plan sponsors have the option of allowing plan members to use their current year’s allocation to pay for claims incurred in the prior year.


For example, a plan member exhausted her balance last year to pay for a significant dental claim and had zero balance at the end of the year. On January 1st, she received a new allocation of $500. She was able to submit the portion of her dental claim that she could not cover using her 2024 balance.


When myHSA plans are set up so that unused funds are forfeited, claims carryover allows employees to deal with large expenses on their own terms. However, it’s important to note that these claims require special handling at the moment because the myHSA system doesn’t yet recognize them as legitimate.


Important considerations

CRA does not allow organizations to apply both Balance Carryover and Claims Carryover simultaneously. Doing so could eliminate the “Element of Risk” that must exist in all HSA plans to maintain their non-taxable status. Similarly, you can’t switch your plan from year to ear to deal with situations as they arise.


If you have questions about your plan set up or if you’d like to discuss changes to your account, please reach out. We’d love to hear from you. ​ 

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