The annual limits for Health FSAs and Transit and Parking Reimbursement Plans are increasing in 2024. This week the IRS announced cost-of-living increases for several types of employee benefits in Revenue Procedure 2023-34. Each year, the IRS announces cost-of living related increases for different employee benefit related limits tied to rates of increase in the Consumer Price Index. The statutes authorizing Health FSAs and Transit and Parking and Reimbursement Plans are among those that require these adjustments.
Among the limits announced this week are those applicable to Health Flexible Spending Arrangements (Health FSAs) with Plan Years beginning at any time during 2024. In addition, they apply to reimbursements paid by Transit and Parking Reimbursement Plans for expenses incurred during any month of 2024.
Health FSAs
Plans with 12 month Plan Years beginning in 2024 may allow employee salary reduction contributions up to $3,200 per year. This is an increase of $150 over the $3,050 limit applicable to Plan Years beginning in 2023. Health FSAs with Plan Years consisting of less than 12 months must pro-rate the applicable limit.
The new employee contribution limit also impacts the Health FSA rollover limit for Plan Years beginning during 2024. In 2020, the IRS linked the maximum annual Health FSA rollover to 20% of the annual employee contribution limit. Therefore, for Health FSAs beginning in 2024, $640 can be rolled over into the following Plan Year. This is an increase of $30 over the originally announced $610 limit for Plan Years beginning in 2023.
Transit and Parking Reimbursement Plans
Plans may reimburse participating employees up to $315 per month for qualifying benefits. This is a $15 per month increase over the 2023 monthly limit of $300. The $315 limit applies separately to monthly benefits provided for Transit / Van Pooling related expenses and Parking related expenses. Therefore, employers could reimburse participants up to $630 per month if the employee incurs eligible Transit and Parking expenses.
Next Steps for Admin America Health FSA and Transit and Parking Reimbursement Clients
Admin America will automatically adjust the applicable 2024 annual limits for Health FSA and Transit and Parking Reimbursement clients previously utilizing the 2023 limits. Clients who wish to take advantage of these automatic adjustments do not need to take any action. Health FSA and Transit and Parking Reimbursement Clients utilizing the 2023 maximums who do not wish for Admin America to automatically adjust their 2024 limits may submit plan changes online here or may send an e-mail request to renewal@adminamerica.com.
Questions?
If you have any questions, please contact our FSA customer service. You can reach team via telephone at (678) 578-4641 or via e-mail at fsa@adminamerica.com.
