IRS Releases New Health FSA and Commuter Benefit Account Limits and Updates Carryover Maximum for 2025
By Jody Oliver, CEO of Flores & Associates
As we look ahead to 2025, the landscape of employee benefits, leave, and compliance is poised for significant transformation. At Flores & Associates, we pride ourselves on staying ahead of the curve to provide our clients with the most innovative and effective solutions. Here are our bold predictions for the coming year:
1. Expansion of Medical Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs)
With the rising cost of healthcare, we anticipate a surge in the adoption and expansion of FSAs, HSAs, and HRAs. Employers will increasingly offer these plans to provide employees with more control over their healthcare spending. Expect to see more flexible contribution limits and enhanced integration with wellness programs, making these accounts more attractive and beneficial for employees.
2. Rising Cost of Dependent Care and Tax Advantaged Solutions
The cost of dependent care is on the rise, making it increasingly important for employees to take advantage of the tax benefits associated with dependent care accounts. These accounts allow employees to set aside pre-tax dollars to cover eligible dependent care expenses, providing significant savings. Employers should educate their workforce about these benefits to help them manage the financial burden of dependent care more effectively.
3. Streamlined Family and Medical Leave Act (FMLA) Provisions
While significant expansions to FMLA may not be on the horizon, we predict efforts to streamline and simplify existing provisions. This could include clarifying eligibility criteria and reducing administrative burdens for employers. Companies will need to stay informed about these changes to ensure compliance and support their workforce effectively.
4. COBRA Compliance and Health Coverage Continuity
As the workforce becomes more dynamic, with frequent job changes and gig economy roles, COBRA compliance will remain critical. We foresee a focus on maintaining continuous health coverage during employment transitions, with potential simplifications to COBRA processes to reduce administrative overhead for employers.
5. Rise of Digital HR Compliance Solutions
The digital transformation of HR is set to accelerate. In 2025, we expect a significant shift towards digital compliance solutions that leverage artificial intelligence and machine learning. These technologies will help HR departments manage complex regulations, automate compliance tasks, and reduce the risk of errors. Companies that embrace these innovations will be better positioned to navigate the evolving regulatory landscape.
6. Increased Focus on Mental Health and Well-being
Mental health and well-being will continue to be a top priority for employers. We predict that 2025 will see a rise in comprehensive mental health benefits, including access to virtual therapy, mental health days, and wellness programs. Employers will recognize the importance of supporting their employees’ mental health as a key component of overall productivity and job satisfaction.
7. Increased Need for Transit and Parking Benefits
As employers bring more people back to the office, the demand for transit and parking benefits will continue to grow. Providing these benefits can help ease the transition for employees returning to in-person work and reduce commuting-related stress. Employers should consider offering or expanding transit and parking benefits to support their workforce and enhance overall job satisfaction.
At Flores & Associates, we are committed to helping our clients navigate these changes and stay ahead of the curve. By anticipating these trends and preparing for the future, we can ensure that our clients are well-equipped to meet the evolving needs of their workforce.
About the Author
Jody Oliver is the Chief Executive Officer of Flores & Associates, LLC, a leading national administrator of employer-sponsored reimbursement plans and compliance solutions. Jody joined Flores in 2021 and has 25+ years of leadership experience. He is a seasoned executive experienced in building and improving both operational and commercial organizations in SaaS-based technology and technology-enabled service companies.