Friday, January 20, 2012

Guidance on health FSA cap of $2500

The health reform law (PPACA) imposes an annual limit of $2,500 on employee salary reduction contributions to Health Flexible Spending Accounts (FSAs).  PPACA states that this provision is effective beginning January 1, 2013 and the amount will be indexed annually for inflation. 

For calendar year plans, this provision will have no effect on your plan until the 1/1/2013 renewal period. However, because this is a calendar year cap and not a plan year cap, employers with 2/1/2012 through 12/1/2012 fiscal plan years should consider this as they plan for their 2012 renewal--some employers may find it simpler to institute the $2,500 cap at this renewal.  Final guidance has not been issued on the cap, and it is possible that the cap will be delayed or increased.

For more detailed information on this provision and options for complying with this regulation, refer to this news alert from ProBenefits.

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