Health Flexible Spending Account Contribution Limits

Effective for plan years beginning on or after January 1, 2017, the amount employees may contribute to a Health Flexible Spending Account (Health FSA) is capped at $2,600 per year, indexed for a cost-of-living adjustment. Plan sponsors can amend Section 125 Plans retroactively to reflect the $2,600 limit at any time through December 31, 2017. However, the plan cannot allow a participant to make salary reduction contributions for a plan year beginning January 1, 2017 and after in excess of the $2,600 limit.

The $2,600 limit applies only to salary reduction contributions, not to other employer contributions such as flex credits. The limit applies separately to each individual who is eligible to participate in a Health FSA; if each spouse is eligible to participate in a Health FSA through the same or different employers, each spouse can separately contribute $2,600. Finally, unused salary reduction contributions to a Health FSA for a plan year beginning in 2014 or later that are carried over to the next plan year will not count against the limit for the subsequent plan year.

Neither American Fidelity Assurance Company nor American Fidelity Administrative Services provides tax or legal advice and, given the complexity of these laws, we always recommend working with your legal counsel on how the laws impact your specific situation.