The IRS recently announced changes to the 2019 contribution caps for health flexible spending accounts and transportation plans.
The annual, pre-tax contribution limit for employee health flexible spending accounts (FSAs) will increase $50 in 2019 to $2,700. This also applies to limited-purpose FSAs which are designed for use with health savings accounts and exclusively cover dental and vision expenses.
- The health care FSA pre-tax salary reduction limit is per employee, per employer, per plan year. If an employer contributes to the health care FSA, their contribution is in addition to the amount that the employee can elect to set aside. As a result, the employee could have more than $2,700 available per plan year to reimburse qualified medical expenses if the employer contribution is part of the plan design.
- If an employer allows the $500 rollover (carryover) for the health care FSA, any amount that rolls over into the new plan year does not impact the maximum election the employee can make.
2019 Transportation Plans
Parking and transit limits for 2019 each increase to $265 per month. Note that the limits to transportation plans include any employer contribution towards parking or transit benefits.
Don't Lose it. Use it!
As contribution caps continue to rise for FSAs, many employees who enroll fear they may end up losing some of the money they set aside at the beginning of the year for eligible expenses. IRS rules dictate that FSA money can be spent only in the calendar year it’s contributed. Employers should help ensure their employees don't leave any money on the table and make the most of this valuable benefit.
You can find helpful information on FSAs and eligible health and dependent care expenses here - from PAYFLEX, a benefits administration partner to businesses.