Published on September 2, 2014

Flex spending account cap expected to rise in ‘15

By Jerry Geisel, Crain News Service

WASHINGTON (Sept. 2, 2014) — The maximum contribution employees will be able to make to their flexible spending accounts (FSAs) is expected to rise in 2015 by $50 to $2,550, according to Buck Consultants at Xerox calculations.

That $50 increase would be the first since the 2010 healthcare reform law set a $2,500 annual limit, effective in 2013.

Aside from imposing a $2,500 cap, the Patient Protection and Affordable Care Act (ACA) specified that starting in 2014, the new limit would increase to match the rise in the consumer price index (CPI) at the close of a 12-month period ending on Aug. 31.

For the 12-month period ending Aug. 31, 2013, CPI indexing resulted in an indexed amount of $2,542, which, when rounded down to the nearest $50—a methodology set by the ACA—resulted in a $2,500 maximum contribution for 2014, the same as in the prior year.

However, already through the end of July of this year, the indexed amount has risen to $2,583. Rounding down to the nearest $50 results—effective in 2015—in a maximum contribution limit of $2,550.

While that increase will be welcomed by employees, the maximum FSA contribution limit will be far lower than what employers typically previously allowed.

Prior to the ACA-imposed $2,500 limit, employers typically allowed employees to contribute between $3,000 and $5,000 to their FSAs, said Rich Stover, a Buck Consultants principal in Secaucus, N.J.

This report appeared on the website of Crain’s Business Insurance magazine, a Chicago-based sister publication of Tire Business.

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