2014 FSA and HSA Contribution Levels

The upcoming new year means new limits for Health Savings Accounts (HSAs) and Flexible Spending Arrangements (FSAs) accounts.

HSA Contribution Limits for 2014

Age 54 and under Age 55 and above
Self-only Coverage $3,300 $4,300
Family Coverage $6,550 $7,550

The IRS allows for an extra $1,000 catch-up contribution during the year you turn 55. So, if your 55th birthday is in the 2014 calendar year, you are eligible for the extra contribution.

For those using Tango to manage their HSA, your 2014 annual contribution limit will be updated based on your insurance coverage, as reported by your employer, and age. Also, if you or your spouse contribute to another HSA this year, you should enter those contributions n Tango’s limit calculator to avoid exceeding your IRS maximum. Learn more about how spouses should handle HSAs here.

HDHP Minimum and Maximum Limits for 2014

Minimum Deductible Maximum Out-of-Pocket
Self-only Coverage $1,250 $6,350
Family Coverage $2,500 $12,700

To learn more about how to use your HSA, check out our HSA 101 page or the handy quiz we created to help you determine how much you should contribute.

FSA Contribution Limits for 2014

Below are the IRS guidelines of FSA contribution limits, but your employer may restrict these based on their plan design.

Minimum Maximum
FSA (including limited) $25 $2,500
Dependent Care $25 $5,000

Your employer may also decide to utilize the new Carryover period in lieu of a Grace Period this year.  This option allows you to carry up to $500 of your remaining 2013 balance into 2014. This only affects your Health FSA and does not apply to Limited or Dependent Care FSAs.

85 thoughts on “2014 FSA and HSA Contribution Levels

  1. Mat I contribute 1,500 and my spouse contribute $1,500 for the FSA. We work at different places. We have no carryover.

    • Hi Melanie,

      I assume that you are asking if you can each contribute $1,500 to your own individual FSAs and in that case, the answer is yes. There is a personal limit of $2,500 on each FSA but you are not held to that limit together – only as an individual. If both of your companies offer the FSA as an option then you both have the ability to open and fund your individual FSAs to the 2014 max of $2,500.

      Let me know if you still have questions.

      Paige

  2. I am wondering who do we write to see about having the limit raised to a more reasonable amount. $2499.00 does not come close to covering the two of us for the year. I am disabled and can’t work so we are dependent on just his income.

    • Hi Cindy,

      I understand your frustration and I’m sorry. The limits for the FSA and HSA are determined by the IRS so if you wanted to talk to anyone, you would need to contact the IRS directly. Here is their information:

      Telephone Assistance for Individuals:
      Toll-Free, 1-800-829-1040
      Hours of Operation: Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

      Paige

  3. My company contributes $1,000 to my FSA. Does that mean I can only deduct $1,500 from my own paycheck, or do I get to deduct a full $2,500 of my own funds as well as the company contribution?

    • Hi Greg,

      Here is what I found in an IRS Publication regarding this topic:

      “As noted, the $2,500 limit applies only to salary reduction contributions and not to employer non-elective contributions, sometimes called flex credits. Generally, an employer may make flex credits available to an employee who is eligible to participate in the cafeteria plan, to be used (at the employee’s election) only for one or more qualified benefits. For further information on flex credits, see Prop. Treas. Reg. § 1.125-5(B). For example, if an employer contributes a $500 flex credit to each employee’s health FSA for the 2013 plan year, each employee may still elect to make salary reduction contributions of $2,500 (as indexed for inflation) to a health FSA for that plan year. However, if an employer provides flex credits that employees may elect to receive as cash or as a taxable benefit, those flex credits are treated as salary reduction contributions for purposes of § 125(i).”

      Here is the link to the rest of the publication: http://www.irs.gov/irb/2012-26_IRB/ar09.html

      Reading that, it makes me thing it does not affect your personal contribution limit for the FSA, however that is all the information I have and it is important to follow up with your employer or HR department going forward to see how your plan is laid out. I hope that helps!

      Paige

  4. can i be in both a FSA and HSA? Assuming I am in a HDHP. My annual deductible is $1,500.
    Currently I am in a FSA.

    • Hi Ken,

      Unfortunately you cannot have both an FSA and HSA at the same time per IRS rules. If you still have funds in your HSA then you can still spend those down until it is depleted while you have your FSA but you cannot contribute any further to the HSA once your FSA starts.

      I hope that helps!

      Paige

    • If the question was in fact whether or not they can have a limited purpose FSA and an HSA at the same time then the answer would be yes. However, since they did not specify, I wanted to err on the safe side with that one. But you are correct about being able to have both an HSA and limited purpose FSA together.

      Thanks.

  5. I agree with Cindy, the maximum needs to be adjusted. It should allow for up to a families OOP total. I have $3000 DED and $6000 OOP max, which are concurrent. My company has a HIA of $1500, so in the end I am responsible for $4500 but can only put aside $2500 as my wife does not work. Definitely need to contact the IRS on this.

  6. Can your have an FSA, and have the max, $2500, and your spouse, working at different company which offers HSA, elect the max as well $6550?
    than you

    • Hi Humberto,

      Unfortunately, no you cannot have both an FSA and HSA in the same family. Here is what the IRS Publication 969 has to say about the HSA eligibility in regards to other types of coverage:

      “An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. Health FSAs and HRAs are discussed later.

      However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements.

      Limited-purpose health FSA or HRA. These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible.

      Suspended HRA. Before the beginning of an HRA coverage period, you can elect to suspend the HRA. The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. When the suspension period ends, you are no longer eligible to make contributions to an HSA.

      Post-deductible health FSA or HRA. These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met.

      Retirement HRA. This arrangement pays or reimburses only those medical expenses incurred after retirement. After retirement you are no longer eligible to make contributions to an HSA.”

      So unless the FSA is one of the ones mentioned above, which is sounds like it is not, you cannot have both accounts at the same time. You can always use your FSA or HSA funds on your spouse which is why you would be considered to be covered under each others FSA/HSA.

      Here is the link to the rest of the Publication 969: http://www.irs.gov/publications/p969/ar02.html#en_US_2013_publink1000204039

      Let me know if you have further questions!

      Paige

  7. Thanks Paige,
    I am a little confuse, perhaps a little more info will help.
    My wife has been working at her company since before we marry, and they have the HDHP helt plan, with an HSA. up until now she has been contributing $2800. Me, working under different employee with a regular health insurance plan, have an FSA, which I am contributing the $2500. We have not make any changes to these plans since we got marry last year. This year we are having some big expense, (She) and were thinking in increasing her HSA, to the $6550, but again not sure if that is possible.
    should we cancel my FSA at my company and just use her HSA? Does it matter that we have two different health insurances?
    Thanks for the help.

    Humberto

    • Hi Humberto.

      If you are covered under your PPO (regular insurance plan) and your wife is NOT covered under that plan with you, she is still eligible to make contributions to her HSA, as long as you do not have an FSA. A family unit cannot have both an FSA and an HSA at the same time so you must choose one or the other. Additionally, if your wife is covered under your regular insurance plan (the PPO) then she is not eligible for the HSA as she must only be covered under an HDHP to be eligible for the HSA.

      If you are able to cancel your FSA then she can contribute to her HSA as normal but if not then she will need to cease making contributions since you cannot have both accounts together.

      Here is another excerpt from the IRS Publication 969:

      “You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan.”

      So again, as long as she is not covered under your PPO plan and there is no FSA, she is eligible for the HSA.

      Paige

  8. Hi,

    If my husband and I both have $2500 each (total $5000) in FSA – can we do the following:

    1. Can we use the entire $5000 for my (one person’s) healthcare costs?
    2. Or we have to use our individual amounts for our individual health care costs?

    Thanks!

    • Hi,

      Thanks for contacting us. You can use your FSA on your spouse so there should be no issue with that. Here is an excerpt from the IRS Publication 969 regarding the FSA and eligible expenses:

      “Qualified medical expenses are those incurred by the following persons.
      -You and your spouse.
      -All dependents you claim on your tax return.
      -Any person you could have claimed as a dependent on your return except that:
      -The person filed a joint return,
      -The person had gross income of $3,900 or more, or
      -You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s 2013 return.
      -Your child under age 27 at the end of your tax year.”

      Considering this, there should be no issue using all of the funds on person since you are eligible to use your funds on your spouse.

      Paige

  9. If work for company A in the begaining of a year and contribute $2500 to a FSA account and mid year leave the company to work for company B can I put in an additional $2500 in an FSA account? Will the amount I contribute to company B be considered to be over the irs contribution maximum?

    • Hello Maria,

      It is my understanding that if you leave your company mid-year then you are eligible for an additional $2,500 at the new company as well, even if you have already contributed to another FSA at the previous company.

      Paige

  10. If I take the maximum amount ($6550) for my HSA, can my wife also get the limited purpose FSA for $2500 (daughter in braces), totaling $9050 in total? I am wondering if these are separate limits of if the $6550 is the limit for both?

    • Hello Mike,

      The IRS states that you cannot have both an HSA and an FSA together within the same family. However, there are a few types of FSAs that you can have with an HSA and these are called “limited-purpose FSAs.” If the FSA is a limited-purpose dental, dependent care, childcare, vision or another type of account that can only be used for specific expenses and not for general medical purposes, then you are allowed to have that with your HSA.

      It sounds like you would be enrolling in a limited-purpose dental FSA if it is for braces, but I would make sure before you do.

      Let me know if you have further questions!

      Paige

  11. Hi,

    I have a family of 4 I pay $5,688 a year in medical premiums out of my pocket. Can I take the entire amount of $5,688 contributing to my FSA?

    • Hi Christina,

      I am assuming that you are asking whether or not you can contribute $5,688 into an FSA to cover your medical premiums. Unfortunately, the limit for the FSA contributions is far below that, at $2,500. You also cannot use an FSA to pay for premiums through your employer.

      Let me know if that did not answer your question.

      Paige

  12. Hello!

    If my fiance and I are on the same insurance plan (my plan, he being my domestic partner), can we both get separate FSA accounts for the total of $2500 each, or will I be the only one eligible for it being the primary insurance holder. Thank you!

    • Hi Jessica,

      Thanks for contacting us. You are both allowed to have your own FSA and contribute the maximum amount, but the FSA is tied directly to the employer, so he couldn’t open one through your employer too. If he is employed and if they also offer an FSA program then he is allowed to utilize the FSA program through his employer.

      I hope that makes sense!

      Paige

    • Hi Mike,

      There are no pro-rated FSA limits so if you are eligible for any part of the year or the full year, your contribution limit is the same. This means that your maximum is $2,500 for a regular FSA.

      Paige

    • Hi Mike,

      There are no pro-rated FSA limits so if you are eligible for any part of the year or the full year, your contribution limit is the same. This means that your maximum is $2,500 for a regular FSA.

      Paige

  13. If I enroll in a HDHP for a June 1 plan year and contribute the maximum amount to my HSA, then I leave my current employer I can take those HSA funds with me. If I go to my new employer and they only have an FSA, can I put the maximum contribution into the FSA (not limited purpose) in the same year that I maximized my contribution to an HSA with my previous employer? Is there an impact if they run on different plan years (June 1 vs January 1)?

    • Hi Kristen,

      You can have an FSA and an HSA within the same tax year but you cannot be contributing/receiving benefit from both accounts at the same time.

      One other thing I would like to point out is that if you are only on an HDHP for part of the year then you are also only eligible for the HSA for a partial year. This means that you are not eligible to contribute the full annual contribution limit to your HSA in that year. You will have a pro-rated amount to reflect the amount of time you were on an HDHP.

      If you contribute the full amount and end up not being eligible for the full year, you will have over-contributed and you will be penalized for each dollar that exceeded your pro-rated limit.

      Paige

  14. Hi Paige,
    I have health ins coverage for whole family. My son just got braces and have agreed with dentist to defer a $3000 payment to next year so that I can set up a FSA to cover the expense. I see the limit is $2500 per year which I will set up. Can my wife also setup a FSA at her employer for another $2500 even though she is covered through my health insurance and does not insurance from her work?

    • Hi Hitendra,

      Thanks for contacting us. You can certainly open an FSA through your company. Your wife’s insurance coverage does not determine whether or not she can establish an FSA as well. If her employer also offers an FSA program, she will be allowed to establish an account through them.

      The biggest thing here is that the FSA is tied directly to the employer, so she couldn’t open one through your employer but if hers offers the program then she is allowed to do it through her employer.

      I hope that makes sense!

      Paige

    • Hi Rose,

      Unfortunately, if you wanted to take advantage of the catch-up contribution of $1,000 for both spouses, you would need to open 2 separate accounts. The HSA will always only be in one person’s name, even if you designate a beneficiary on the account. Because of this, the account holder whose name is on the account is only eligible for one of the catch-up contributions.

      If your spouse wants to utilized their catch-up contribution, they have to open their own HSA and contribute the $1,000.

      Let me know if you have any questions!

      Paige

  15. My husband just got a new job. we owe so much hospital bills from birth. Can we sign up to the 2500 Max to pay part of these old bills?

    • Hi Adoyo,

      As you’re referring to the $2500 maximum, I will assume you
      are inquiring about enrolling in a medical FSA to cover your past
      hospital bills. If this is the case, then generally speaking, funds
      from a medical FSA can only be used to cover expenses incurred
      during the FSA plan coverage year. So if your hospital bills
      fall outside of the FSA plan coverage year, then you cannot
      use FSA funds to cover them. However, I would recommend that you
      and your husband follow-up with his employer and/or FSA
      provider to determine whether there may be any exceptions based
      on their plan setup.

      Carmen

  16. Hi,

    I have a family health care plan with HSA covering me and my wife. This year I have spent more than $7000 out of my pocket for my wife’s health care. Can I claim the entire amount from the HSA ?

    Thanks in advance for your answer.

    Thanks & Rgds
    Karthik

    • Hi Karthik,

      Per IRS regulations, you can use your HSA funds to cover or
      reimburse any qualified health expenses that were incurred since
      the date you became HSA-eligible AND your HSA was established. So
      as long as both are true in your situation, and you have the HSA
      balance to cover the amount, you can use your HSA to cover the
      full amount of your wife’s medical expenses.

      If however you’ve met your contribution limit for the year and
      do not currently have the balance to cover the full $7000 this
      year, you do have the ability to use funds in future contribution
      years to cover this year’s expenses, since there is no time
      limitation on when you can cover or reimburse past eligible
      expenses.

      Of course, this would mean that you would essentially be taking
      away funds which could be used to cover future expenses, but you at
      least have this option if ever your healthcare situation
      necessitates your doing so.

      Carmen

  17. Hi I am curious what happens if you elect a contribution amount to the dependent care and by the end of the year it goes over by like 32 cents. Is the whole 5000.32 penalized by the IRS? or just that little extra?

    • Hi Julie,

      In the event of an over-contribution to a dependent care FSA, you would only be penalized on the excess amount and not the amount amount you were eligible for.

      Carmen

  18. What is the formula to figure out the HSA pro rated contribution amounts for an individual that is not enrolled in a qualified HDHP for the entire plan year?

    • Hi Eric,

      In order to calculate your prorated HSA contribution limit, you would divide the maximum contribution amount for your coverage type (self-only or family) and age group (under 55, 55 and over) by 12, which will give you the monthly amount you’re eligible for, and then you’d multiply that amount by the number of months you were eligible. Below is a breakdown of the 2014 contributions limits by age and coverage type:

      Self-only under 55: $3300
      Self-only 55 and over: $4300
      Family (individual + 1 or more persons) under 55: $6550
      Family 55 and over: $7550

      Carmen

  19. My husband and I got married in May. I have a HDHP/HSA through my employer (self-only coverage) and he has a PPO/FSA through his employer (self-only coverage). I checked with my employer last year during open enrollment and they said this was OK for this year only as long as we stayed below $6,550 total, and that next year we would need to choose one or the other. Now that I am reading through this, I am wondering if I should have stopped contributing to the HSA in May. Thoughts?

    • Hi Ali,

      Per IRS regulations, if your spouse has an FSA, that makes you ineligible to continue making contributions to your HSA, and your contribution limit for the year would be prorated based on the time you were eligible. Since you married in May and your husband had FSA coverage at the time, then you were only eligible for HSA contributions for January through May (five months), so you would need to calculate your prorated limit by dividing your 2014 maximum limit by 12, and then multiplying that amount by 5.

      If the total amount of contributions you’ve made year-to-date is less than or equal to that prorated amount, then there is no further action you need to take other than discontinuing any further contributions to avoid over-contributing. However, if the total amount you’ve contributed is more than that prorated amount, then you’ve over-contributed and would need to contact your HSA custodian to find out their process for correcting excess contributions, or face a tax penalty on the excess amount.

      Carmen

  20. Can an employer have different medical FSA minimum annual election limits for employees based upon years their of service? For example, for 1-5 years of service, ER has $500 minimum. For 5-10 years same employer has minumun of $750 and so on.

    • Hi Margy,

      The employer’s FSA plan setup would be determined by their section 125 cafeteria plan setup, so they would need to refer to this in determining what is allowed in structuring their FSA election minimum election limits. As long as their proposed FSA plan setup is within those guidelines, imposing a minimum based on years of service would be allowable.

      Carmen

    • Hi John,

      The FSA limits for 2015 will be the same as for 2014:
      - Medical and Limited-purpose FSAs: $2500
      - Dependent Care FSA: $5000 per individual, or $2500 per spouse filing jointly

      These limits apply to both employer and employee contributions to the FSA.

      Carmen

    • Hi David,

      Yes, if given the option, you would be able to make the maximum contribution to both a health FSA and a dependent care FSA respectively, as each arrangement cover different costs.

      Carmen

  21. Hi,
    My husband and I are trying to set up two FSA accounts for 2014. He already had one set up in January for 2014. I want to open a FSA account when I start a new job on Nov 3. Can I use my FSA account for expenses incurred in 2014 prior to starting my new job? We have used up all the funds in my husband’s FSA account.Thank you.

    • Hi Moe,

      With regards to FSAs, you can only use your funds in any FSA plan year to cover expenses incurred in that same plan year. So you would not be able to use your FSA to cover expenses incurred before the plan started.

      Carmen

  22. My employer contributes 1500 for my HSA account. If I am also listed under my wife’s insurance can she contribute 2500 towards her FSA account. Technically I am not contributing towards my HSA. Also, would I be eligible to use my employers 1500 HSA contributions?

    • Hi Scott,

      If your wife has a medical FSA, per IRS rules you are not eligible to make OR receive HSA contributions, which includes contributions made by an employer. So if you want to receive your employer’s HSA contributions, your wife would not be able to have an FSA, and vice versa.

      Carmen

  23. If your wife is the holder of the HSA and is younger than 55 years old, can we put an additional $1000 beyond the $6550 limit for 2014 if I am 55 years old and not working?

    • Hi Ken,

      If your wife is under 55, she cannot contribute your $1000 catch-up contribution into her HSA, as the catch-up amount can only be contributed into an HSA owned by the individual who’s eligible for it. However, if you are covered by her HDHP and are otherwise eligible for HSA contributions, you can open your own HSA through the custodian bank of your choice and contribute the $1000 catch-up amount there.

      Carmen

  24. Hi Carmen,
    For 2014, if my wife puts the maximum allowed($6550)in her HSA,and also puts the maximum allowed($2500)in a limited purpose FSA,can we pay for our daughters braces this year with the limited purpose FSA money before using any of the funds in her HSA account?

    Thanks,
    Ken

    • Hi Ken,

      There is no regulation on when to use your HSA or FSA funds, although it’s recommended that you use the funds in your FSA first as those will not rollover from plan year to plan year, so you will lose any funds remaining in the FSA at the end of the plan year and any applicable grace period.

      Carmen

      • Hi Can I start the year with FSA and switch to HSA under a HDHP plan due to birth of a child? The FSA would be closed after the birth. I assume that I can not claim expenses occurring after the switch takes place, from the closed FSA,i.e., the expense must occur while FSA is active.

        • Hi Wilson,

          The only way you would be able to contribute to an HSA after having an FSA is if you are no longer making payroll deductions to reimburse funds that have been spent from your FSA, meaning your FSA plan has completely ended. If this is the case, then you can contribute to an HSA under an HDHP after switching from an FSA.

          Carmen

  25. Hi Can I start the year with FSA and switch to HSA under a HDHP plan due to birth of a child? The FSA would be closed after the birth. I assume that I can not claim expenses occurring after the switch takes place, from the closed FSA,i.e., the expense must occur while FSA is active.

    • Hi Wilson,

      The only way you would be able to contribute to an HSA after having an FSA is if you are no longer making payroll deductions to reimburse funds that have been spent from your FSA, meaning your FSA plan has completely ended. If this is the case, then you can contribute to an HSA under an HDHP after switching from an FSA.

      Carmen

  26. My wife and I are over 55. We have an HDHP and I have an HSA covering my wife and I. I have contributed $6000 so far. If my wife opens her own HSA in December, how much can she contribute (if I stop contributing to my HSA for the rest of 2014)?

    • Hi Curt,

      Since you are covering your wife on your HDHP and you are both over 55, your HSA contribution limit would be $6550 plus the additional $1000 catch-up contribution you would each be eligible to make into your respective HSAs, making your combined total $8550. So if you have already contributed $6000 into your HSA ($5000 towards your combined $6550 family limit, plus your $1000 catch-up amount), then your wife would be eligible to contribute $2550 into her own HSA for 2014 (the remaining $1550 of your combined $6550 family limit, plus her $1000 catch-up contribution).

      Carmen

  27. Thanks for all the very useful info. I am currently paying out of pocket for an HSA-eligible plan and my employer contributes $5000 into my HSA. We have a lot of medical bills so the high-deductible plan is probably not going to work for us anymore. We are considering switching to a PPO. If we do so, my employer will fund a FSA up to $2000. Would this be considered salary reduction (it would not actually come out of my paycheck) or could I personally contribute an additional $2500 to meet the IRS limit? Also, am I going to take a big hit on my taxes by not having an HSA anymore. Thanks so much for your help.

    • Hi Clayton,

      Here is an excerpt from IRS Bulletin 2012-26 which addresses the $2500 FSA limit and employer contributions: “As noted, the $2,500 limit applies only to salary reduction contributions and not to employer non-elective contributions, sometimes called flex credits. Generally, an employer may make flex credits available to an employee who is eligible to participate in the cafeteria plan, to be used (at the employee’s election) only for one or more qualified benefits. For further information on flex credits, see Prop. Treas. Reg. § 1.125-5(b). For example, if an employer contributes a $500 flex credit to each employee’s health FSA for the 2013 plan year, each employee may still elect to make salary reduction contributions of $2,500 (as indexed for inflation) to a health FSA for that plan year. However, if an employer provides flex credits that employees may elect to receive as cash or as a taxable benefit, those flex credits are treated as salary reduction contributions for purposes of § 125(i).”

      So as long as your employer’s contribution meets these criteria, then you can contribute an additional $2500 into your FSA. Regarding your tax burden now that you’re no longer contributing to an HSA, the amount you’d be responsible for paying in taxes would depend solely on how much you were contributing to your HSA versus how much you’ll now be contributing to your FSA, as you’ll have to pay taxes on the difference of those amounts as it will now be considered taxable income.

      Carmen

  28. can an employer impose a household limit of $2,500 for a FSA if both spouses work for the same company? My understanding is it is a per employee limit – just wondering if because both work at same employer that employer has ability to limit their risk?

    • Hi Leigh,

      Here is an excerpt from IRS Publication 2012-26 which addresses this specific situation: “The $2,500 limit on salary reduction contributions to a health FSA applies on an employee-by-employee basis. Thus, $2,500 (as indexed for inflation) is the maximum salary reduction contribution each employee may make for a plan year, regardless of the number of other individuals (for example, a spouse, dependents, or adult children (see § 105(b)) whose medical expenses are reimbursable under the employee’s health FSA. Consistent with this rule, if each of two spouses is eligible to elect salary reduction contributions to an FSA, each spouse may elect to make salary reduction contributions of up to $2,500 (as indexed for inflation) to his or her health FSA, even if both participate in the same health FSA sponsored by the same employer.”

      For more information, here’s a link to the full document: http://www.irs.gov/irb/2012-26_IRB/ar09.html#d0e5809.

      Carmen

    • Hi Joyce,

      Here is an excerpt from IRS Bulletin 2012-26 which addresses the $2500 FSA limit and employer contributions: “As noted, the $2,500 limit applies only to salary reduction contributions and not to employer non-elective contributions, sometimes called flex credits. Generally, an employer may make flex credits available to an employee who is eligible to participate in the cafeteria plan, to be used (at the employee’s election) only for one or more qualified benefits. For further information on flex credits, see Prop. Treas. Reg. § 1.125-5(b). For example, if an employer contributes a $500 flex credit to each employee’s health FSA for the 2013 plan year, each employee may still elect to make salary reduction contributions of $2,500 (as indexed for inflation) to a health FSA for that plan year. However, if an employer provides flex credits that employees may elect to receive as cash or as a taxable benefit, those flex credits are treated as salary reduction contributions for purposes of § 125(i).”

      So as long as your employer’s contribution meets these criteria, then you can contribute up to the $2500 employee salary deduction maximum into your FSA.

      Carmen

  29. I have my health insurance with my employer and covered under my husband health insurance as secondary with another company
    . He plans to contribute 4000.00 to his HSA & I would like to contribute to my FSA 2500.00. Can we do this?

      • Hi Joan,

        IRS regulations state that spouses are not permitted to contribute to both an HSA and an FSA between them in the same plan year, even if they have separate health coverage between their respective employers. So you would need to either cancel your HSA contributions, or your spouse would need to cancel his FSA completely in order to avoid tax penalties for contributing to both accounts.

        Carmen

    • Hi Joan,

      IRS regulations state that spouses are not permitted to contribute to both an HSA and an FSA between them in the same plan year. So you would need to either cancel your HSA contributions, or your spouse would need to cancel his FSA completely in order to avoid tax penalties for contributing to both accounts.

      Carmen

    • Hi Joyce,

      Here is an excerpt from IRS Bulletin 2012-26 which addresses the $2500 FSA limit and employer contributions: “As noted, the $2,500 limit applies only to salary reduction contributions and not to employer non-elective contributions, sometimes called flex credits. Generally, an employer may make flex credits available to an employee who is eligible to participate in the cafeteria plan, to be used (at the employee’s election) only for one or more qualified benefits. For further information on flex credits, see Prop. Treas. Reg. § 1.125-5(b). For example, if an employer contributes a $500 flex credit to each employee’s health FSA for the 2013 plan year, each employee may still elect to make salary reduction contributions of $2,500 (as indexed for inflation) to a health FSA for that plan year. However, if an employer provides flex credits that employees may elect to receive as cash or as a taxable benefit, those flex credits are treated as salary reduction contributions for purposes of § 125(i).”

      So as long as your employer’s contribution meets these criteria, then you can contribute up to the $2500 employee salary deduction maximum into your FSA.

      Carmen

  30. I start a new job in Nov and I am eligible to enroll in FSA on day 1. If I enroll in FSA for $1K but i only have 3 pay periods left for the remainder of the year, will $333 ($1K / 3 remaining pay periods) be deducted from my pay check or $38 ($1K / 26 pay periods) be deducted from my pay check?
    Thanks

    • Hi Brandon,

      How your FSA deductions are taken is determined by your employer, so you would need to refer to them directly for clarification on this.

      Carmen

  31. Is the $2,500 Health Care FSA limit a calendar limit or can it be based on my employers fiscal year (7/1-6/30). I ask because I started employment 9/2013 and elected $2500 then elected $2500 during open enrollment 6/30/2014. My total for 2014 will be over $2500. Is this okay?

    • Hi Michale,

      The $2500 FSA limit is based on the employer’s plan year. So if you elected $2500 when you hired in the 2013-2014 plan year, you have the ability to elect another $2500 for the 2014-2015 plan year.

      Carmen

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