FSA

IRS Announces New FSA, Commuter & QSEHRA Limits for 2027

The Internal Revenue Service (IRS) recently released the inflation-adjusted 2027 contribution limits for certain employee benefit programs. Below is a summary of some of the contribution limit adjustments.

Health FSAs

The payroll deduction contribution limit for 2027 plan years is $3,500 — an increase of $100.
Up to $700 of unused funds can be carried over from the 2027 plan year to the 2028 plan year — an increase of $20
- Carryover is an optional feature that employers can choose to offer with the Health FSA

Dependent Care FSAs

The maximum contribution limit is $7,5000 for the 2023 calendar year. $3,750 if married and filing taxes separately.
This contribution limit is not inflation adjusted.

Commuter Programs

The monthly contribution limit for mass transit is $350 — an increase of $10.
The monthly contribution limit for qualified parking is $350 — an increase of $10.

Qualified Small Employer HRAs (QSEHRAs)

The maximum annual contribution for single-only coverage for 2027 plan years is $6.700 — an increase of $250.
The maximum annual contribution for family coverage for 2027 plan years is $13,550 — an increase of $450.

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IRS Announces New FSA, Commuter & QSEHRA Limits for 2027

The Internal Revenue Service (IRS) recently released the inflation-adjusted 2027 contribution limits for certain employee benefit programs. Below is a summary of some of the contribution limit adjustments.

It’s Tricky: FSAs + Carryover + COBRA

Two things happened in 1986. Run-D.M.C released their hit song, “It’s Tricky,” and COBRA became effective. Thirty-two years later, Run-D.M.C.’s music is still popular, and COBRA administration is still tricky—especially when it comes to Flexible Spending Account (FSAs). Add FSA carryover to the mix, and it gets even trickier.

How to Determine FSA Administration Break-Even Point for Employers

Flexible Spending Accounts (FSAs) are one of the few benefits an employer can provide that often pays for itself (and then some). While there are expenses that will be incurred by the employer when using a third-party administrator for the FSA, there are also payroll tax savings that will offset some or all of those expenses.

The Financial Benefits of FSAs for Employers

To offer an FSA, or not to offer an FSA, that is the question. Let’s just cut right to the chase. Flexible Spending Accounts (FSAs) are a great way for employees to save on taxes for medical and dependent care expenses, but employers also receive financial benefits by offering an FSA.