Highlights of the Health FSA Contribution Limit

  • Applies to all employers who sponsor a health flexible spending account (FSA)
  • Effective as of the start of the 2013 plan year
    • May not change plan year simply to delay application of the limit
  • Employee salary reduction contribution may not exceed $2,500 per health FSA per year
    • Amount applies regardless how many family members are covered by the health FSA (i.e., a single employee can contribute up to $2,500 and a married employee with four children can contribute up to $2,500)
    • Limit is per employee (so a married couple could each contribute $2,500, even if both are employed by the same employer)
    • Employer contributions, whether direct or through flex credits, do not count towards the $2,500 limit
    • If the plan offers a grace period to incur claims, amounts reimbursed during the grace period do not apply to the $2,500 limit
    • Contributions to HRAs, HSAs, dependent care FSAs and/or for pre-taxation of premiums do not count toward the $2,500 limit
    • An employee with two employers during the year (who are not part of the same controlled or affiliated service group) who each sponsor a health FSA could contribute $2,500 to each health FSA
  • Must amend the plan to reflect this change by Dec. 31, 2014 (which is longer than employers normally have to amend a Section 125 plan)
  • The $2,500 limit is indexed for inflation

Action Needed:

  • Verify that the administrator of the FSA is prepared for this change
  • Communicate the limit to employees as part of FSA enrollment for 2013
  • Amend the plan to include the new limit by Dec. 31, 2014

 

 

Megro Benefits Company

Two Radnor Corporate Center
Suite 110
Radnor, PA 19087
610-567-0175
800-527-3615

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