"However, if the employer contribution is a result of the employee’s use of cafeteria plan flex credits which he/she may have otherwise elected to receive in cash or as a taxable benefit, then the contribution would count towards the $2,650 limit." Noted Janet Stebbins, a benefit analyst with Marsh Consulting Group in Paso Robles, Calif. "Employer contributions generally do not count toward the limit," The new $2,650 limit applies to employee pretax salary reduction contributions to either a full-purpose or a limited-purpose health FSA. Health FSAs can be funded on a pretax basis by employees, employers or both. "Of course, employers are not required to change the contribution limit on their plan," he noted. "Employers should ensure that their health care FSA will not allow employees to make pretax contributions in excess of $2,6, and they should communicate the 2018 limit to their employees as part of the open enrollment process," said Steven Costello, principal and co-founder of CBG Benefits, an employee benefits brokerage and service provider headquartered in Woburn, Mass. "Once again, the IRS delivers their FSA maximum limit changes too late for many employers to adjust their printed communications," said Brian Uhlig, Chicago-based senior vice president for benefits consulting at GCG Financial, part of Alera Group, a network of insurance and financial services firms."
Employers should communicate the higher cap to employees during open enrollment and include the new limit in their open-enrollment materials-even if they must, at this late date, do so through a printed or online addendum.
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