The Internal Revenue Service announced that the 2019 annual contribution limit to Flexible Spending Accounts (FSA) will be $2,700 in 2019, an increase of $50 over 2018. This is the annual employee pre-tax maximum contribution allowed under both the Health Care Flexible Spending Account (HCFSA) and Limited Expense Health Flexible Spending Account (LEXFSA) available to federal employees.
Health Care FSA
A Health Care FSA (HCFSA) is a pre-tax benefit account that’s used to pay for eligible medical, dental, and vision care expenses that are not covered by your health care plan or elsewhere. With an HCFSA, you use pre-tax dollars to pay for qualified out-of-pocket health care expenses.
The money you contribute to an HCFSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck. You decide how much to contribute to your HCFSA based on how much you plan to spend in the upcoming year on out-of-pocket medical, dental, and vision care expenses. Since the money allotted to your HCFSA is not subject to payroll taxes, you save an average of 30% on your eligible health care expenses.
The FSAFEDS website has a savings calculator to help federal employees determine potential savings when using these types of accounts.
Important: An HCFSA cannot be used to pay for health insurance, life insurance, long term care insurance or any other insurance premiums, or costs for temporary continuation of coverage (TCC). See Health Care FSA for more information.
Limited Expense Health FSA
A Limited Expense Health Care FSA (LEX HCFSA) is a flexible spending account option if you are enrolled in a Federal Employees Health Benefits (FEHB) high-deductible health plan (HDHP) and have a Health Savings Account (HSA). This option is also available if your spouse is enrolled in a non-FEHB HDHP and has an HSA.
IRS rules do not allow you to contribute to a Health Savings Account (HSA) if you are covered by any non-qualifying health plan, including a general-purpose Health Care FSA.
By limiting FSA reimbursements to qualifying dental and vision care expenses, you and your spouse remain eligible to participate in both a LEX HCFSA and an HSA.
Participating in both plans allows you to maximize your savings and tax benefits. The money you contribute to a LEX HCFSA is not subject to payroll taxes, so you pay less in taxes and take home more of your paycheck.
Open season for federal employee benefits is currently underway and runs through December 10. You can find more information on these flexible spending accounts or enroll at fsafeds.com.