Thursday, December 14, 2017
 

Highlights of the New FSA Limits

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Becker Suffern McLanahan, Ltd.

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  • Applies to all employers who sponsor a health flexible spending account (FSA)
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  • Effective as of the start of the 2013 plan year
    • May not change plan year simply to delay application of the limit
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  • 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
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  • 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)
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  • The $2,500 limit is indexed for inflation

Action Needed:

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

 

This information is general and is provided for educational purposes only. It reflects UBA's understanding of the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.
08-Aug-2012

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