Excellent news to your workers with Versatile Spending Accounts (FSA): the contribution restrict has elevated.
The Inside Income Service (IRS) launched the annual cost-of-living changes affecting the utmost contribution limits for a number of pre-tax advantages, together with well being FSAs, transit/parking accounts, and HSAs.
The IRS confirmed that for plan years starting on or after Jan. 1, 2024, the contribution restrict for well being FSAs will improve one other $150 to $3,200. For these plans that enable a rollover of unused funds, the utmost rollover quantity will improve by $43 to $640 for 2024.
Moreover, the month-to-month contribution and reimbursement restrict for transit and parking FSAs will improve by $15 to $315 per account in 2024.
|
2024 Limits |
2023 Limits |
|
|
Well being FSA |
$3,200 Rollover – As much as $640 |
$3,050 Rollover – As much as $610 |
|
Transit/Parking FSA |
$315/month |
$300/month |
|
HSA |
$4,150 Single |
$3,850 Single |
|
$8,300 Household |
$7,750 Household |
Workers should use FSA funds inside a plan yr. Keep in mind that well being FSAs have a “use-or-lose” rule, which means that any funds left unused on the finish of the yr are forfeited to the employer.
Workers ought to at all times know their contributions and advantages. While you equip your individuals with a self-service portal, they will simply entry their particular profit info with none back-and-forth with HR.
Two Exceptions to the FSA Rule
Two exceptions to the use-or-lose rule permitted by the IRS are rollover and beauty interval. HR groups should talk firm insurance policies to workers nicely upfront so individuals can plan accordingly.
- Rollover: If funds aren’t utilized by the top of the yr, as much as $640 might be rolled over from the 2024 plan yr into the following plan yr.
- Grace Interval: An employer can undertake a grace interval for his or her well being FSA. As defined by the IRS, “A grace interval is a interval of as much as two months and 15 days instantly following the top of a plan yr throughout which a participant could use quantities remaining from the earlier plan yr (together with quantities remaining in a well being FSA) to pay bills incurred for sure certified advantages throughout that two-month and 15-day interval.”
A well being FSA could incorporate both of those options; nonetheless, a plan could not have a rollover and grace interval.
Plans may embrace run-out durations that present members extra time to submit claims incurred through the plan yr (usually 90 days). This may be along with both a rollover or grace interval.
