The Internal Revenue Service announced annual inflation adjustments for 2023. Sponsors of calendar-year health flexible spending account plans look for guidance on contribution limits in order to prepare for open enrollment.
For plan years beginning in 2023, the dollar limit on employee salary reduction contributions to a health flexible spending account will increase to $3,050, which is a $200 increase over the 2022 limit. Health FSAs that permit the carryover of unused amounts from one year to the next may set a maximum carryover amount of $610 for the 2023 plan year. This is an increase of $40 from the 2022 carryover limit.
The dollar limit on employee salary reduction contributions to a dependent day care flexible spending account is not adjusted for inflation. The dollar limit on employee salary reduction contributions to a dependent day care flexible spending account will remain at $5,000 ($2,500 if married filing separately) for the 2023 plan year.
Employers should consider adopting the inflation increase and communicate FSA limits as part of open enrollment.