The Internal Revenue Service recently issued Revenue Ruling 2019-44 announcing the cost-of-living adjustments for calendar year 2020. This ruling includes an increase in the dollar limitation under §125(i) on voluntary employee salary reductions for contributions to health Flexible Spending Accounts (FSA) from $2,700 to $2,750.
| Health Flexible Spending Account Limits by Tax Year | ||||
| 2020 | 2019 | 2018 | 2017 | 2016 |
| $2750 | $2700 | $2650 | $2600 | $2550 |
Important Reminder if MedCost Administers Your FSA: All Plan changes must be approved by the Plan Sponsor by way of a Plan amendment, and as such, MedCost does not automatically increase the limit for your plan members when an increase is announced by the IRS. If you wish to allow your plan members to increase their annual elections up to the 2020 IRS maximum limit, contact your MedCost Account Manager. Upon your request and amendment to your Plan, MedCost will update your Plan to implement the contribution election increase for your members.
For guidance on FSAs, please review the IRS Frequently Asked Questions page.