For 2020, employees can contribute $2,750 to health FSAs, up from the 2019 limit of $2,700, the IRS said in Revenue Procedure 2019-44. The increase also applies to limited-purpose FSAs that are restricted to dental and vision care services, which can be used in tandem with health savings accounts (HSAs).
FSA annual rollover
In addition to the new contribution limits, employers can still allow up to $500 in unused health FSA balances to rollover to the next year. Any additional remaining balance will not be available after the new year.
About FSAs
FSAs are sponsored by employers, and are generally entirely funded by the employee. The employer sets up the account and the employee is then able to make their own contributions
FSAs are one way for employees to use pre-tax dollars to pay for medical expenses, such as doctor visit copays, vision expenses, and prescription drug costs.
To learn more about FSAs check out our other resources on the topic:
