IRS Releases New Health FSA and Commuter Benefit Account Limits and Updates Carryover Maximum for 2025

What you need to know:

• The 2025 Health FSA employee contribution limit is $3,300. For Flores Health FSA clients currently allowing the 2024 IRS maximum employee contribution limit of $3,200, Flores will automatically adjust your Health FSA and Limited FSA plans to allow for employee contributions up to the IRS maximum of $3,300 for your 2025 plan year. Flores plan documents will be updated automatically to reflect the change. No changes will be made to your plan maximum if you indicated you do not want an automatic adjustment on your 2025 re-enrollment checklist.


• For plans permitting a Health FSA or Limited FSA carryover, the maximum carryover amount for plan years beginning in 2025 is $660 (or 20% of the FSA statutory annual max), which is an increase of $20 from the carryover limit of $640 for plan years beginning in 2024.


• Monthly Commuter Benefit limits for parking and for transit will rise by $10 from $315 to $325 for tax year 2025.
  

Broker and Client Actions:

Charlotte, NC – October 22, 2024 – Today the IRS announced the Health FSA and qualified transportation contribution limits for plan years beginning on or after January 1, 2025 in Revenue Procedure 2024-40.

2025 Health FSA and Transportation Contribution Limits

The 2025 Health FSA employee contribution limit is $3,300 (up $100 from the 2024 FSA annual limit). The maximum Health FSA carryover is indexed each year to 20% of the annual IRS maximum employee contribution limit. Therefore, for plan years beginning in 2025, the carryover maximum is $660 (or 20% of the 2025 FSA annual maximum of $3,300), which is an increase of $20 from the 2024 carryover limit of $640. As set by the Internal Revenue Code, the Dependent Care FSA limits for 2025 remain $5,000 for married filing jointly or single and $2,500 for married filing separately. The 2025 transportation benefit contribution limit is $325 per month (up $10 from the 2024 limits).
For Flores Health FSA clients who currently allow the 2024 IRS maximum employee contribution of $3,200, Flores will automatically adjust your Health FSA plan to allow for employee contributions up to the 2025 IRS maximum of $3,300 for your 2025 plan year. Flores Cafeteria Plan documents will be updated automatically to reflect the change. No changes will be made to your Health FSA maximum if you indicated you do not want an automatic adjustment on your 2025 re-enrollment checklist.

Reminder Regarding 2025 Plan Maximums and Limits Previously Announced

The IRS also previously released the 2025 plan maximums and limits for health and welfare plans. Health Savings Account ("HSA") contribution maximums will increase in 2025 to $4,300 for self-only coverage and $8,550 for family coverage. In addition, the maximum out-of-pocket amounts will increase to $8,300 and $16,600 respectively and the minimum deductibles for HSA-qualifying health plans will increase to $1,650 and $3,300 respectively.
For employers subject to the ACA's Play-or-Pay mandate, the affordability safe harbor percentage applicable to 2025 plan years will be 9.02% (up from 8.39% in 2024). HHS out-of-pocket limits for ACA-compliant plans in 2025 will be $9,200 for self-only coverage and $18,400 for family coverage.

Read the IRS Release