Higher contribution limits for 2025 give individuals and families more opportunity to save money and pay for eligible healthcare products and services
DALLAS, Oct. 23, 2024 /PRNewswire-PRWeb/ -- From over-the-counter medications and high-tech health devices to qualified telehealth services and clinical procedures, more than 35 million Americans who are enrolled in flexible spending accounts (FSAs) will be able to set aside more money to care for their health in 2025. In light of the newly announced 2025 FSA contribution limits from the Internal Revenue Service, FSAstore.com® is educating account holders about little-known FSA facts that will help them make the most of their tax-free funds in the coming year. FSA Store, the first and leading online store dedicated to exclusively selling FSA-eligible products, is part of the Health-E Commerce® family of brands.
What is an FSA? An FSA is a tax-advantaged account that consumers can enroll in through their employer-sponsored benefits program. Employees can contribute to the account through pre-tax payroll contributions and any employer contributions are also tax favored. This reduces the employee's taxable income and helps them pay for a wide range of expenses. FSA-eligible expenses are determined by the Internal Revenue Service.
About the new limit: According to the IRS, the limit for FSA employee contributions will increase from $3,200 in 2024 to $3,300 in 2025. In addition to the contribution limit increase, the amount of unused FSA funds that an employer may allow employees to carry over from year to year will also increase. The carryover amount will increase from $640 in 2024 to $660 in 2025 (the carryover max is always 20% of the current FSA contribution limit). The FSA carryover feature is optional for employers. Account holders should check with their benefits department to confirm if this option is available to them.
Five surprising facts about FSA contributions:
1. The $3,300 limit for 2025 applies on a per FSA account basis. If an account holder switches jobs mid-year, they can elect to contribute the full amount at their new employer, regardless of the amount of claims they had incurred at their previous employer.
2. There is only one FSA contribution limit that applies to both individuals and families. This differs from a health savings account (HSA) where there is a separate limit for health plan participation as an individual vs. two-person/family.
3. If two spouses each have access to their own FSA through their respective employers, they could each elect the maximum of $3,300 for a combined household set-aside of $6,600.
4. The FSA limit does not include the optional carryover amount. For example, if an employer offered a carryover of $640 in 2024, an account holder could have a balance of $3,940 in their FSA in 2025 ($3,300 2025 FSA max + $640 2024 FSA carryover).
5. The FSA contribution limits apply only to pre-tax employee contributions. Employers may contribute to an employee's FSA in excess of the employee contribution maximum.
"Individuals and families rely on an FSA to bridge the gaps in their healthcare coverage and to deliver savings throughout the year. By increasing the FSA contribution limits to keep pace with inflation, the Internal Revenue Service is enabling individuals and families to help protect their health, wellness, and financial wellbeing," said Rachel Rouleau, chief compliance officer for Health-E Commerce. "Our mission is to educate consumers about how to use their FSA and to simplify and improve the account experience by delivering a guess-free, guaranteed-eligible shopping experience at FSA Store."
FSA Store offers a free, comprehensive eligibility list that makes it easy to map spending for the remainder of the year to ensure consumers don't leave any tax-free funds on the table due to a missed deadline. FSA Store shoppers can also personalize their FSA experience by sorting for everyday healthcare needs by product, category, lifestyle or health condition.
To learn more about FSAs, visit the FSA Learning Center at FSAstore.com.
Media contact: Barbara Tabor, [email protected], 651-230-9192
About Health-E Commerce
Health-E Commerce is the parent brand to FSA Store and HSA Store, online stores that serve the 70+ million consumers enrolled in pre-tax health and wellness accounts. The company also created Caring Mill™, a popular private-label line of health products through which a portion of every purchase is donated to the Children's Health Fund. Since 2010, the Health-E Commerce brands have led the direct-to-consumer e-commerce market for exclusively pre-tax health and wellness benefits. Health-E Commerce plays an essential role in expanding product eligibility for important new categories within the list of eligible medical expenses.
Media Contact
Barbara Tabor, FSA Store, 651-230-9192, [email protected], https://fsastore.com
SOURCE FSA Store
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