Health Flexible Spending Account Contribution Limits
Effective for plan years beginning on or after January 1, 2015, the amount employees may contribute to a Health Flexible Spending Account (Health FSA) is capped at $2,550 per year, indexed for a cost-of-living adjustment. Plan sponsors can amend cafeteria plans retroactively to reflect the $2,550 limit at any time through December 31, 2015. However, the plan cannot allow a participant to make salary reduction contributions for a plan year beginning January 1, 2015 and after in excess of the $2,550 limit.
The $2,550 limit applies only to salary reduction contributions, not to other employer contributions such as flex credits. The limit applies separately to each individual who is eligible to participate in a Health FSA; if each spouse is eligible to participate in a Health FSA through the same or different employers, each spouse can separately contribute $2,550. Finally, unused salary reduction contributions to a Health FSA for a plan year beginning in 2014 or later that are carried over to the next plan year will not count against the $2,550 limit for the subsequent plan year.
Health FSA Contribution Limit Hot Topics & FAQs
- Does the limit take effect January 1, 2015, or the first plan year beginning on or after January 1, 2015?
Answer: The Department of Treasury published guidance in Rev. Proc. 2014-61, providing the limit is effective for taxable years beginning in 2015
- Is the $2,550 Health FSA contribution limited per household?
Answer: No. Each employee is limited to a $2,550 Health FSA contribution per employer (or smaller amount if the employer’s plan has a lower limit).
American Fidelity Assurance Company does not provide tax or legal advice.