Use It or Lose It: FSA Limits for 1/1/2013 – Thinking Ahead

Use It or Lose It: FSA Limits for 1/1/2013 – Thinking Ahead

Written by Jenn Paton, Senior Account Manager

Healthcare Reform UpdatesHave you considered the impact that the new FSA limit for medical expenses will bring on January 1, 2013?  2013 is just around the corner when you think about all of the changes per Healthcare Reform (ACA).  As you may know, FSA contributions will be limited to $2,500 per year.  Currently, there is no limit and employers are able to set their own limits internally.  Many of the benefits clients that I work with limit their FSA medical accounts to approximately $5,000.

Flexible Spending Accounts Defined

Flexible Spending Accounts (FSA) are tax-advantaged financial accounts that can be set up through your employer.  An FSA allows an employee to set aside a portion of earnings to pay for qualified expenses as established in benefits plan, most commonly for medical expenses but often for dependent care or other expenses. (Source Wikipedia)

Use It or Lose It

Since this is a ‘use it or lose it’ benefit, many employees tend to be conservative when they first enroll in a medical FSA.  However; over time, they realize what a tremendous benefit it is to be able to set aside pre-tax dollars for major medical, pharmacy, dental, and vision expenses over the course of the year.  Do you have children?

Pre-Tax Benefit Example

To give you an example, an employee may know in advance that their dependent child may need braces which can be a significant expense – well over $5,000.  If the employer can’t offer a medical FSA over $2,500, then the employee has no way to reap the benefit of the tax savings.

  • How will this new mandate affect you and your company?
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About the Author

FosterThomas is a leading professional services company that provides solutions in the areas of Human Resources Consulting and Outsourcing, HR Staffing, Outsourced Recruiting, Employee Benefits Brokerage, Payroll Implementation and Services, HR for Government Contractors, Business Insurance, HR Compliance and Risk Management. We help organizations by providing solutions designed with a focus on cost containment strategies and increasing HR efficiency. FosterThomas HR Consulting was established in 1993 with offices in Annapolis, Maryland (Corporate), McLean, Virginia and Raleigh, North Carolina. Today, FosterThomas occupies a unique position as a full service provider of HR services.

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