Health FSA Limit Will Increase for 2020
For taxable years beginning in 2020, the IRS dollar limit for employee health Flexible Spending Account (FSA) contributions is increased to $2,750. The health FSA dollar limit is on an employee basis; therefore, each employee may only elect up to $2,750 regardless of any additional family members who may benefit from the use of health FSA funds.
Employers may continue to impose their own dollar limit on employee contributions to health FSAs if the limit does not exceed the maximum limit in effect for the year. For example, an employer may decide to continue limiting employee FSA contributions for the 2020 plan year to $2,500.
Employers deciding to increase the FSA contribution limit should communicate the new 2020 limit to their employees as part of the open enrollment process and update any plan documents as needed. Employers imposing their own FSA limit should ensure that it does not exceed the maximum limit for the plan year.