The IRS released Revenue Procedure 2021-45 (Rev. Proc. 21-45), which permits the following increases for health FSAs for plan years beginning in 2022:
- $2,850 Contribution limit ($100 increase from the 2021 health FSA limit)
- $570 Carryover limit, for FSAs with a Carryover provision
The IRS guidance also includes annual inflation-adjusted numbers for 2022 for a number of other tax provisions, including adoption assistance, transportation benefits and more.
Employer Action Items:
- Contact your flex administrator to determine whether your cafeteria plan must be amended prospectively to allow for the increased contribution amount, if desired.
- Ensure the health FSA will not allow employees to make pre-tax contributions in excess of $2,850 for the 2022 plan year.
- Communicate the 2022 limit to employees as part of the open enrollment process.
- If wrapping up open enrollment for the upcoming 2022 plan year, you may allow employees, who elected the 2021 limit, to increase their election to the new limit.
For recent Compliance Check blog posts, visit: https://www.valentgroup.com/category/employee-benefits/compliance-check/
This blog and its contents are not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.