Today the IRS released Revenue Procedure 2016-55 confirming a $50 increase in the health FSA contribution limit to $2,600.
With the passing of the ACA, employee contributions to an FSA were initially limited to $2500 per plan year. This has increased since 2014 to adjust for inflation with the limit being bumped up slightly to $2550 for 2015 & 2016 plan years.
Now, for health FSA plan years beginning on or after January 1, 2017, we have a new increase in the salary reduction contribution limit to $2,600. Be sure to double-check your Section 125 cafeteria plan document to confirm that it automatically incorporates these health FSA cost-of-living increases or to see if you need to specifically request to have the cap increased.
Earlier this year, the IRS also announced the inflation adjusted amounts for 2017 HSA contributions in Revenue Procedure 2016-28. For individuals in self-only coverage, the 2017 contribution limit will increase to $3,400 (up from $3,350). The family coverage contribution limit remains at $6,750 again in 2017.