A health flexible spending account (FSA) is an attractive tool for bolstering funds for certain medical expenses, with contributions deducted tax-free from participating employee’s paychecks.
Individuals may contribute up to $3,200 toward their 2024 FSA. If a working spouse is also eligible for an FSA account, the total household contribution limit is $6,400. The 2024 dependent care FSA maximum contribution remains at $5,000, an amount that was set by Congress in 1986.
Some plans may permit an annual carryover amount or a grace period between plan years. Employees who have a carryover option can rollover a balance of $640 from 2024 to 2025. For those with a grace period between plan years, funds may be available for up to two and a half months beyond the plan year's end. If a plan does not have a rollover allowance or grace period, funds will be forfeited at the end of the year. Employers may utilize one of these options, but not both.
When looking at all the account-based tax-saving benefit options, it’s important to weight the pros and cons of each. Factors like contribution limits, account ownership, portability and qualified purchases vary. To learn more about which offerings would be most valuable to your employee population, consult with your Bukaty Companies representative.