The Internal Revenue Service (IRS) recently published the updated 2018 contribution limits for health Flexible Spending Accounts (FSAs), Transportation benefits, and Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs). The new limits go into effect starting January 1, 2018. This information is especially valuable during enrollment season when participants are electing their benefit coverages for the upcoming year. The 2018 FSA contribution limits, and other benefit account increases are as follows:
The annual 2018 FSA contribution limits for health FSAs will go up by $50, from $2,600 to $2,650.
The Dependent Care FSA (also known as a DCAP) limit stays at $5,000 for married filing jointly/head of household.
It’s important to keep in mind that for FSAs, participants can change their election amounts during open enrollment at will. However, once the plan year starts, you can’t change your FSA election amount unless you have a qualifying event (i.e., marriage, divorce, birth of a child). Be sure to check your Summary Plan Description (SPD) for your sponsor’s rules.
QSEHRAs, which were signed into law with the 21st Century Cures Act in December 2017, will see a bump in reimbursement 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).
QSEHRAs, like a traditional HRA, is funded solely by the employer. Each employer’s plan is unique and reimbursement limits are not the same for every company. Check your employer’s SPD for your plan’s reimbursement limits.
Transit/commuter account participants will also see an increase in their maximum monthly contribution limits. The limit on transit/commuter accounts goes up from $255 to $260 per month. This includes parking, mass transit fare, and commuter highway vehicle passes.
The monthly limit for bicycle commuter benefits remains the same at $20 per month.
Transit/commuter elections may be changed on a monthly basis.
The 2018 HSA contribution limits were published by the IRS in May 2017. HSA account holders with individual coverage will be able to contribute up to $3,450, a $50 increase. Those with family coverage may contribute up to $6,900, an increase of $150.
If you own an HSA, you may update your election amount at any time, as long as you are covered by a qualified high deductible health plan.