Short answer: Health Spending Accounts (HSAs) can roll over but only within CRA rules.
The Canada Revenue Agency (CRA) allows businesses to include a 12-month carry-forward for either unused credits or unclaimed expenses, but not both.
At Coastal HSA unused credits roll forward for 12 months, and employees have a short grace period to submit last-year’s expenses.
CRA Rules for HSA Rollovers
Under CRA’s Private Health Services Plan (PHSP) guidelines, businesses may allow one type of rollover for up to 12 months:
| Type | Description | CRA Limit |
|---|---|---|
| Credit Carry-Forward | Unused HSA credits (the employer contribution) roll into the next benefit year. | 12 months max |
| Expense Carry-Forward | Unclaimed eligible expenses roll into the next year for reimbursement. | 12 months max |
| Both | ❌ Not allowed | CRA permits only one type at a time |
How Coastal HSA Handles Rollovers (and Stays CRA-Compliant)
At Coastal HSA, our rollover design follows CRA’s PHSP rules — offering flexibility to employees while keeping your plan compliant and simple.
Here’s how it works:
- 12-Month Credit Rollover:
Any unused health credits on December 31 automatically roll over into the new benefit year (January 1).
Those credits remain available for one additional year, after which they expire. - Claim Cut-Off Period (March 1):
Employees can submit prior-year expenses until March 1 of the following year but must use health credits from that prior year.
This short submission grace period is standard across the benefits industry and does not count as an “expense carry-forward” under CRA rules.
✅ This setup ensures:
- Only credits roll forward (not expenses).
- Claims are processed within a short, practical window.
- The plan remains fully CRA-compliant.
Why CRA Limits Rollovers
The CRA restricts rollovers to keep HSAs functioning as benefit plans, not savings accounts.
A 12-month limit ensures that funds are used for health and dental care in a reasonable timeframe — preserving the HSA’s tax-free status.
Example: How an HSA Rollover Works
Let’s say your company provides a $3,000 annual HSA allowance:
- In 2024, an employee uses $2,000.
- The remaining $1,000 rolls over into 2025.
- They can use that $1,000 until the end of 2025.
- On March 1, 2026, the claim window for any health expenses in 2025 closes.
Are Unused HSA Funds Lost?
When credits expire after the rollover period, the credits are simply removed from the user’s account.
That money was never paid out, so it doesn’t create any income or administrative work.
Summary: Do Health Spending Accounts Rollover?
| Question | Answer |
|---|---|
| Can HSA credits rollover? | ✅ Yes, up to 12 months |
| Can HSA expenses rollover? | ✅ Yes, up to 12 months (if no credit rollover) |
| Can both rollover? | ❌ No, CRA allows only one type |
| Coastal HSA rollover type | ✅ Credit rollover only |
| Claim cut-off period | March 1 of following year (submission grace period, not expense carry-forward) |
The Bottom Line
Yes — Health Spending Accounts can roll over in Canada, but only within CRA rules.
At Coastal HSA, we use a 12-month credit rollover and a claim submission grace period to give employees extra flexibility while keeping the plan fully CRA-compliant.
👉 Learn more or start your plan today at CoastalHSA.ca
💬 Frequently Asked Questions About HSA Rollovers in Canada
1. How long can unused HSA credits roll over in Canada?
Unused HSA credits can roll over for up to 12 months under the CRA’s Private Health Services Plan (PHSP) rules. After that, the unused balance expires.
2. Can both credits and expenses roll over in a Health Spending Account?
No. The CRA allows only one type of carry-forward — either a credit rollover or an expense rollover, not both.
3. What happens to unused HSA balances after the rollover period?
After the 12-month rollover period, any unused credits expire and are removed from the employee’s account. These expired credits reduce the employer’s total credit allocation.
4. Does Coastal HSA allow expense carry-forward?
No. Coastal HSA only allows credit carry-forward.
5. Is a short claim cut-off period allowed by CRA?
Yes. A brief claim submission window (like until March 1 of the following year) is considered an administrative grace period — not an expense carry-forward.
6. What’s the benefit of a 12-month credit rollover?
A 12-month rollover gives employees extra time to use their benefits and save up for large health expenses.