Currently, The ACA imposes a limit on contributions to a health FSA. A flexible spending account is an account that allows a person to set aside money. The account owner can then use those funds to reimburse themselves for medical expenses. In 2017, the ACA and IRS limited contributions to $2,600. These limits are flexible; designed to increase according to the cost of living. Due to this, the IRS announced that the limit for 2018 would raise to $2,650 for 2018.
What are the Changes?
First, the new limits apply only to voluntary contributions. So if an employee receives contributions from their employer, these do not count toward the limit. Further, employers are still able to limit their employees contribution to a smaller amount. They could, for example, limit employees to $2,500. These limits also only apply to medical FSA’s. An FSA for dependent care assistance or adoption care assistance will remain unaffected by the new limit. Finally, the new limit remains a per employee limit. If two employees are married, and both have an FSA, they are both allowed to contribute the maximum to their FSA. If you have questions about updating your employee benefit materials, or would like more info about FSA’s, please reach out to us. You can reach us at email@example.com, or by phone at 612-492-9320.