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Health FSA Limit Increases in 2019

Employee benefits

A health flexible spending arrangement (FSA), or flexible spending account, allows employees to request an automatic deduction from their paycheck into the FSA to cover anticipated medical expenses over the course of a year. FSAs are funded through voluntary salary reduction agreements with the employer. No employment or federal income taxes are deducted from your contribution, and there is a limit to how much you may contribute in a calendar year. The employer may also contribute.

2019 FSA Limit

Late last year the IRS said it would increase the health FSA contribution limit from $2,650 to $2,700 for taxable years beginning in 2019. This increase reflects a steady contribution limit increase from the past few years.

What Should Employers Do Now?

Employers should ensure that their health FSA will not allow employees to make pre-tax contributions in excess of $2,700 for 2019, and they should communicate the 2019 limit to their employees as part of the open enrollment process.

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