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2018 Health FSA Maximum

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The IRS increased the Health Flexible Spending Account (FSA) maximum by $50 to $2,650 for plan years beginning in 2018.  The amount reflects the annual limit on an employee's contribution; see summary for more information. This and other inflation-adjusted items were announced in Revenue Procedure 2017-58.

WHAT THIS MEANS TO EMPLOYERS:  An employer can increase the annual limit from their current specified maximum by properly amending their plan.  However, if their plan document merely refers to the IRS limit as the maximum, the amount changes automatically; no amendment is necessary.

While reviewing your Health FSA (cafeteria plan) document, be sure to consider whether your plan needs other updates, e.g., expanding the list of events and status changes that permit mid-year election changes.  Also, remember to have your Health FSA (and other features of your cafeteria plan) tested for nondiscrimination compliance.

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