The government has lowered the maximum ceiling amount that can be set aside from $5K/year to $2.5K/year.I assume (?) this is somehow related to the Affordable Care Act?Additional information, anyone?Thank you, I would just like to know the reasons for this.RS
Yes, the Patient Protection and Affordable Care Act amended Section 125 of the Internal Revenue Code for FSAs such that FSAs may not allow employees to choose an annual election in excess of a limit determined by the IRS, effective with plans beginning after 12/31/12. So if your current healthcare plan started in November, you will have your 2012 limits through your reelection season in 2013. The IRS will index subsequent plan years' limits for cost-of-living adjustments.Note that employers can further limit annual elections, and that employees who have access to FSAs through multiple employers can elect an amount up to the limit for under each employer's plan.Note that this does not apply to Health Savings Accounts, Health Reimbursement Accounts or an employee's share of the cost of employer-sponsored health coverage. http://www.irs.gov/irb/2012-26_IRB/ar09.htmlhttp://en.wikipedia.org/wiki/Flexible_spending_accountFuskieWho notes the $2500 limit, or $208.33/month, is still a sizable amount for most individuals, and wishes he had access to an FSA to reduce the costs of his medical expenses...
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