On October 27, the IRS announced the 2021 dollar limit for employee contributions to health flexible spending accounts (health FSAs). The 2021 limit will remain unchanged at $2,750.
For health FSA plans that permit the carryover of unused amounts, the maximum carryover amount for 2021 is $550, which is a $50 increase from 2020, according to IRS Revenue Procedure 2020-45.
Next Steps for Employers
Employers should be mindful of the change to carryover limits and update open enrollment materials and communications to employees regarding the FSA for 2021.