PPACA FSA Contribution Limits

•    Applies to all employers who sponsor a health flexible spending account (FSA)

•    Effective as of the start of the 2013 plan year

• May not change plan year simply to delay application of the limit

•    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

•    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)

•    The $2,500 limit is indexed for inflation

Action Needed:
•    Verify that the administrator of the FSA is prepared for this change

•    Communicate the limit to employees as part of FSA enrollment for 2013

•    Amend the plan to include the new limit by Dec. 31, 2014