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Health FSA and job change - fsa claim limits/deadlines


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Employee level question -

Employee elected maximum allowed into employer's Health FSA plan.

Employee is terminating and has 2 questions:

  1. Is employee required to submit FSA claims prior to last day of employment (ie mid month), or last day of coverage (ie last day of month), taking COBRA out of the picture
  2. Can employee then elect any FSA amount with new employer, regardless of how much was either put into the account of first employer or reimbursed/used at first employer?
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Question 1:

Cafeteria plans typically provide for a 90-day run-out period to submit FSA claims incurred prior to termination. Check the cafeteria plan document for the FSA to confirm. Although this is the most common structure, it is not legally required. This is purely a matter of plan design.

The cafeteria plan may provide that health FSA coverage (i.e., the ability to incur reimbursable claims) continues through the end of the month in which the employee terminates, similar to many major medical/dental/vision plans. This provision is not common for the health FSA, but it is permitted. In the case where coverage continues through the end of the month, the 90-day run-out period will begin as of the end of the month.

Keep in mind that the health FSA is subject to ERISA, so the Outbreak Period extension of up to one-year for a plan's benefit claim filing deadline will also apply to the health FSA run-out period.

Some health FSAs have adopted the CAA FSA relief provision permitting a health FSA spend down in the same manner as a dependent care FSA spend down.  If the plan has adopted that optional relief feature for mid-year terminations during calendar year 2020 or 2021, terminated employees are able to incur reimbursable health FSA claims through the remainder of the plan year in which they terminate (typically only up to the amount of their pre-termination contributions).

Question 2:

Employees can contribute up to $2,750 to the health FSA with as many unrelated employers as they are employed by.  So employees with two unrelated employers in the same year may contribute the max to both employer’s plans—even though the annual total may exceed $2,750.

The health FSA $2,750 salary reduction contribution limit is merely a plan year maximum. It’s not an individual maximum. Employees can therefore make full $2,750 elections to multiple health FSA plans in the same year.

(Note that this is different from the dependent care FSA, which imposes an individual calendar year maximum. The dependent care FSA rules limit total calendar year contributions to $10,500 (or $5,250 if married filing separately) in 2021 over all employers combined.)

Here's the relevant cite:

IRS Notice 2012-40:


All employers that are treated as a single employer under § 414(b), (c), or (m), relating to controlled groups and affiliated service groups, are treated as a single employer for purposes of the $2,500 limit. If an employee participates in multiple cafeteria plans offering health FSAs maintained by members of a controlled group or affiliated service group, the employee’s total health FSA salary reduction contributions under all of the cafeteria plans are limited to $2,500 (as indexed for inflation). Section 125(g)(4). However, an employee employed by two or more employers that are not members of the same controlled group may elect up to $2,500 (as indexed for inflation) under each employer’s health FSA.

Additional Materials:

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