On Friday, October 20, the Internal Revenue Service (IRS) released updated rules for 2018 contribution limits for health Flexible Spending Accounts (FSAs), Transportation benefits, and Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs). These amounts go into effect on January 1, 2018. The 2018 FSA contribution limits, and other benefit account increases are as follows:
2018 FSA Contribution Limits
The annual 2018 FSA contribution limits will go up by $50, from $2,600 to $2,650. This is for health FSAs; the Dependent Care FSA (also known as Dependent Care Assistance Plan) limit remains at $5,000 for married filing jointly/head of household.
2018 Transportation Benefit Limits
The monthly limit on transit/commuter accounts goes up by $5 per month, from $255 to $260. This includes parking, mass transit, and commuter highway vehicles. The monthly limit for bicycles remains at $20 per month.
2018 QSEHRA Contribution Limits
QSEHRAs, which were signed into law with the 21st Century Cures Act in December 2017, will see a bump in annual contribution limits. For 2018, the total amount of reimbursements for any year cannot exceed $5,050 for those with individual coverage (a $100 increase) and $10,250 for those with family coverage ($250 increase).
2018 HSA Contribution Limits
The IRS released the annual 2018 HSA contribution limits on May 9, 2017. HSA account holders with individual coverage will see a $50 increase, and be able to contribute $3,450. Those with family coverage may contribute up to $6,900, a $150 increase from 2017.
This information is valuable during enrollment season, when employees are signing up for their benefits for the following year. For FSAs, participants can change their election amounts for any reason only during open enrollment season. During the plan year, participants cannot change the amount unless they experience a qualifying event (i.e., marriage, divorce, birth of a child); check with your Summary Plan Description (SPD) for your sponsor’s rules.
HSA elections may be changed at any time, as long as the owner remains in a high deductible health plan. Transit/commuter elections may also be changed on a monthly basis.