Cap on Health FSA's?

[Guest Thornton]

Is there a deferral limit on contributions to to Health Flexible Spending Account? I know day care is limited to $5,000, but I can find no limit on heath care. Thanks

[Guest Thornton]

Lisa, since you answered my question, I discovered Prop Reg. 1.125-2, Q 7©. This provides that the maximum amount of reimbursement to a paarticipant for a period of coverage must be less than 500% of the total employer and employee contributions to the FSA of the participant. Does this have any real practicable effect? Also, can an employer have higher levels of co-pay for life and health insurance premiums for HCE's than NHCE's?

[Lisa Hand]

There is no federal limit on Medical FSAs. The limit is detailed in the plan documents and is set by the employer/plan sponsor.

[Lisa Hand]

That 500% is part of the complete definition of a flexible spending arrangement and how they function. The more important numbers are the over-all plan maximum and the cap on the Medical FSA,if any, defined in the plan documents.