IRS Announces Increase in Maximum Employee Health Flexible Spending Account Contribution Amount
The Affordable Care Act capped employee pre-tax contributions to a Health Flexible Spending Account (Health FSA) at $2,500.00 per plan year. This maximum amount is indexed for inflation.
The IRS announced in Rev. Proc. 2014-61 that this limit is increasing by $50.00 to $2,550.00 for 2015.
This means that, for 2015, employees can make pre-tax contributions to their Health FSA accounts of up to $2,550.00. Please keep in mind, however, that if the Plan document limits Health FSA elections to less than $2,550.00, this Plan document limit is still in force.
For example, if the Plan document puts a limit of $2,500.00 on the amount of annual Health FSA benefits that can be elected, then the maximum amount that an employee can elect to have deducted from his or her compensation for the plan year will still be $2,500.00 (not $2,550.00).
This increase in the employee limit does not affect the amount that an employer can contribute to an employee’s Health FSA account. However, the Affordable Care Act caps employer contributions to an employee’s Health FSA account at the greater of $500.00 or 100% of the employee’s Health FSA contribution.
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