Medical Reimbursement Account Maximum Reimbursement?

[Guest Kristine]

Is there a limit on the amount that a group can set as their Medical Reimbursement Maximim?

[SLuskin]

There is not a statutory limit. However, we always recommend a cap or maximum for each client and make sure that it is in the plan document, summary plan description and all other communication materials. First of all, putting a maximum protects the plan sponsor from an employee who would use a very large amount at the start of the plan year and then quit. Second, having a cap often enables a plan to pass the discrimination test by limiting the amount that the key and highly compensated can elect.

[LRDG]

Statutory regs require a plan impose a max contribution at the plan sponsor's discression. The max contribution should consist of pre-tax premiums, medical FSA and dependent/child care FSA. The max must be in the plan doc., in addition to materials distributed to eligible employee population.

The max contribution is determined by the highest premium contribution for each benefit catagory eligible under Sec. 125. For example assume $4200 max. eligible premiums consisting of annual family medical premiums, family dental, employee life and disability income.

Child care FSA max of $5000 under Sec. 129 (?) regs.

The max employee contributions to the medical FSA as determined by the plan sponsor, assume $3000.

The max participant contribution stated in the plan doc and employee material is $12,200.