IRS Provides 2019 Indexing, with Health FSAs Increasing to $2,700

Employers have been waiting a few weeks for this update, and we finally have IRS Revenue Procedure 18-57 giving us some indexing figures for 2019. Below we summarize the changes relevant to benefits.

Last December’s new tax law changed health flexible spending accounts (FSAs) to start indexing to the chained consumer price index (CPI), which typically indexes at a slower pace than CPI. The IRS confirms the health FSA salary reduction limit is increasing $50. Plan years beginning on/after January 1, 2019 may allow salary reductions up to $2,700. Short FSA plan years must pro-rate that limit.

Please let your IMA Benefits team know if you have any questions; we will continue to monitor regulator guidance and offer meaningful, practical, timely information.