The Internal Revenue Service (IRS) last week announced the annual inflation adjustments for more than 60 tax provisions for tax year 2024, including contribution limits for health care Flexible Spending Accounts (FSA)
For the taxable years beginning in 2024, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200. In 2023, the FSA contribution limit was $3,050.
A health care FSA is a pre-tax benefit account that’s used to pay for eligible medical, dental, and vision care expenses not covered by a particpant’s health care plan. Federal employees can re-enroll in FSAFEDS during open season (Nov. 13 – Dec. 11, 2023). Current participants must re-enroll to continue their FSA account for the next benefit year.
SEE ALSO: What to Expect for Federal Benefits Open Season
According to FSAFEDS, enrollees can use pre-tax dollars to pay for qualified out-of-pocket health care expenses, and the money contributed to the FSA is not subject to payroll taxes which increases the take-home pay of the participant.
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FSAFEDS enrollees can also carry over up to $640.00 remaining in their FSAFEDS account from one plan year to the next.
Health Care FSA Eligible Expenses
Health care FSA eligible expenses include:
• Medical expenses: co-pays, co-insurance, and deductibles
• Dental expenses: exams, cleanings, X-rays, and braces
• Vision expenses: exams, contact lenses and supplies, eyeglasses, and laser eye surgery
• Professional services: physical therapy, chiropractor, and acupuncture
• Prescription drugs, insulin, and prescribed over-the-counter medicine
• Over-the-counter health care items: bandages, pregnancy test kits, blood pressure monitors, etc.
The IRS determines which expenses can be reimbursed by an FSA.
For more examples of eligible expenses, go to the FSAFEDS website here.