If an employer has adopted the Carryover, must a participant have a new-plan-year FSA for the prior year’s balance to carryover?

No. Any funds remaining in an individual’s current plan year FSA will be automatically rolled into the new plan year even if the employee didn’t elect to participate in a new plan year FSA. The participant now has the chance to spend up to $500 of his/her carryover money on out-of-pocket healthcare expenses in the following year.