Just a reminder: Starting next year, a number of workers will be impacted by a health reform rule that alters what they can do with their flexible spending accounts (FSAs).

That’s because on Jan. 1, 2013, employees can put aside a maximum of $2,500 each, a significant drop from the current $5,000 limit.

Most not impacted

Realistically, the majority of employees won’t be impacted by the new limit.

According to research, just 12% of workers currently contribute more than $2,500 to their employers’ FSA, and 39% contribute less that that amount.

Of course, there are a handful of employees – staffers with chronic conditions, those with kids who need braces, etc. – who bank on the tax-savings of their FSAs.

These are the workers you’ll want to target during open enrollment.

Obviously, you’ll want to make sure everybody knows about the new FSA limit. But you’ll also want to remind them of some tactics they can use to get the most out of their FSAs.

Example: If staffers have a spouse on their health plan, both of them can contribute $2,500 to an FSA.

Also, in the most recent guidance, the IRS clarified that the annual limit only applies to elective employee contributions – not to employer matching.

Total contributions – combining both employees’ and employers’ input – can exceed the $2,500 limit.

‘Use it or lose it’ repeal unlikely

With each passing day, the possibility of an FSA use-or-lose-it repeal becomes less likely.

Kevin P. Knopf, attorney-adviser in Treasury’s Office of Benefits Tax Counsel recently said, “You have to wait and see what happens with the use-or-lose. I wouldn’t go out and change my plan assuming that it’s going to happen.”

Full details can be found in IRS Notice 2012-40.

The post Alert your workers to changes in FSAs for coming year appeared first on HR Morning.

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