The Internal Revenue Service (IRS) has announced the annual inflation adjustment for flexible spending accounts (FSAs) for the 2020 tax year. As has been the case in previous years, contribution limits will see only modest increases or remain unchanged.
The 2020 dollar limitation on voluntary employee salary reductions for contributions to health FSAs is $2,750 – a $50 increase from the current $2,700 maximum. Funds from these accounts can be used to pay for qualified medical expenses, including deductibles, copays, and coinsurance; insulin, bandages, and other pharmacy items; eye exams and vision expenses; and dental and orthodontic expenses, among other items. Health FSA funds can also be used to pay for common over-the counter medications (i.e., aspirin, ibuprofen, and cough syrup), but only if accompanied by a doctor’s prescription.
The dependent care FSA maximum annual contribution will once again remain $5,000 in 2020. These accounts reimburse the employee for employment-related dependent care while the plan participant and spouse work (or look for work), such as payments to a day care center or baby-sitter, or expenses to care for a disabled spouse or other tax dependent.
MedBen clients who would like to increase their Health FSA employee maximum to $2,750, or who have any questions regarding FSA contributions, are welcome to contact Director of Administrative Services Sharon A. Mills at (800) 423-3151, Ext. 438 or smills@medben.com.