Unsurprisingly, the IRS has announced an increase in the health flexible spending account (FSA) contribution limit for 2024 to $3,200, according to experts. This $150 boost provides employee the opportunity to set aside more tax-free money to pay for qualifying medical expenses.
What Does This Mean for Employers?
Companies will need to update plan rules for 2024 accordingly so employees can defer up to the new $3,200 cap.
In addition to the higher contribution ceiling, employers should note the carryover limit has also increased from $610 to $640. This means if an employer’s plan includes the carryover provision, employees can roll up to $640 of unused health FSA funds into 2025.
More Room for Healthcare Costs
The expanded contribution maximum gives employees more funds in their FSAs to pay for qualified medical expenses. This could be helpful since experts project healthcare price growth will remain high in 2024, potentially reaching up to 8.5 percent.
Later Than Usual Announcement
Open enrollment season is well under way, yet the IRS health FSA news is just rolling out. Experts point out the timing is behind schedule, considering HSA updates came in May and 401(k) changes were announced at the start of November.
For employers in mid-open enrolment who want to communicate plan specifics, it will be important to confirm FSA administrator data is up-to-date with 2024 guidance. Confirming contract details early can help avoid miscommunications around contribution room or carryovers.
What About HSAs and 401(k)s?
In addition to health FSA tweaks for 2024, contribution ceilings have also moved for other workplace savings vehicles like HSAs and 401(k)s. Here’s what else employers should know:
HSAs
- Self-only coverage contribution limit: $4,150
- Family coverage contribution limit: $8,300
401(k)s
- Employee contribution limit: $23,000
- Total contribution limit (with employer match): $69,000
For more employee benefits resources and industry insights, contact INSURICA today.
Copyright © 2024 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.Â
About the Author
Share This Story
Related Blogs
Visitor Check-In and Access Control Best Practices
Visitor check-in and access control best practices are essential for ensuring campus safety. With increasing security concerns in schools, implementing visitor check-in and access control best practices helps minimize unauthorized access, protect students and staff, and ensure a safe learning environment.
Making an Acquisition? Why the EMOD Shouldn’t Be Overlooked
When acquiring another company, there’s no shortage of factors to consider. From valuing physical assets to estimating potential synergies, the due diligence process can be complex. However, one critical element often overlooked is the EMOD.
2026 Employer Mandate Update
In July 2025, the IRS released new guidance increasing both the affordability percentage and penalty amounts under the Affordable Care Act’s employer mandate for the 2026 plan year. These changes will affect how Applicable Large Employers (ALEs) determine affordability and assess compliance risk moving into the next benefits cycle.