The Affordable Care Act (ACA) imposes a dollar limit on employees’ salary reduction contributions to health flexible spending accounts (FSAs) offered under cafeteria plans. This dollar limit is indexed for cost-of-living adjustments and may be increased each year.
• The IRS announced that the health FSA dollar limit will increase to $2,850 for 2022.
• Employers may continue to impose their own dollar limit on employee salary reduction contributions to health FSAs, up to the ACA’s maximum.
• Employers should communicate their 2022 limit to their employees as part of the open enrollment process