The IRS issued the 2020 Health FSA limit, which increased $50 to $2,750.
If an employer’s cafeteria plan document states that the contribution limit reflects the maximum allowable by the IRS, then no changes are necessary. However, if the document states a specific dollar amount, and the employer wants to increase that amount up to $2,750, they should contact their flex administrator to amend their plan prospectively and communicate the change via an updated summary plan description (SPD) or a summary of material modifications (SMM).
Employers who are wrapping up open enrollment for the upcoming 2020 plan year may allow employees, who elected the 2019 limit, to increase their election to the new limit.
The IRS announcement contains additional information on the new contribution limit and other tax-inflated adjustments including adoption assistance, transportation benefits and more.
If you have questions or need help, please contact one of our benefits consultants.