How Much Are the FSA Contribution Limits for 2024?
Key takeaways:
A flexible spending account (FSA) is a tax-advantaged account that allows employees to contribute pretax dollars to pay for qualified health expenses.
For 2024, you can contribute up to $3,200 to a health FSA. This is up from $3,050 in 2023.
If you don’t spend all your FSA dollars, you might be able to roll over some funds into the next year if your employer allows it.
Table of contents
A flexible spending account (FSA) is a tax-advantaged account that allows you to contribute pretax dollars to pay for qualified medical expenses such as prescription contact lenses and dentures. This employer-sponsored benefit is not limited to your healthcare expenses; you can also use an FSA to pay for qualified expenses for your dependents and your spouse if you’re married. But the expenses must not be reimbursed by your insurance or any other program.
Every year, you can contribute money to your FSA to pay for qualified expenses during that year. But don’t put more money in your FSA than you think you’ll actually spend, because you could lose the money left over in your account.
What is the FSA contribution limit for 2024?
The FSA contribution limit is going up. In 2024, employees can contribute up to $3,200 to a health FSA. If you don’t use all your FSA funds by the end of the plan year, you may be able to carry over $640 to 2025. The carryover feature typically allows you to roll over up to 20% of the maximum FSA contribution every year, if your employer allows it.
If you have a limited-purpose FSA (LPFSA), you can also contribute up to $3,200 in 2024. But this type of account is primarily limited to dental and vision expenses. However, you may be able to pay for other qualified medical expenses with your LPFSA after you reach your insurance deductible, if your employer allows it.
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How do FSA contribution limits for 2024 differ from 2023?
For 2023, the maximum contribution limit was $3,050 per person. But for 2024, you can contribute up to $3,200 to a health FSA. That’s a $150 increase year over year. This means you can stash away more tax-free money to pay for eligible healthcare expenses. If your spouse has a separate FSA under another employer plan, they can make a maximum contribution, too.
Year | Maximum FSA contribution | Dollar increase from prior year |
2024 | $3,200 | $150 |
2023 | $3,050 | $200 |
How does an FSA work?
Since an FSA is an employer-sponsored health benefit, you need to work for an employer that offers this type of account to gain access to it. An FSA is a tax-advantaged account that allows employees to set aside a portion of their paychecks to pay for certain out-of-pocket medical products and services during the year.
One benefit of an FSA is that you will have access to your entire annual FSA contribution amount on the first day of the plan year. For example, if you elect to contribute $3,000 for the year, you will have access to all $3,000 on January 1, regardless of the amount that has been deducted from your salary at that time. If you lose your job or quit and you’ve spent more than you’ve actually contributed to your FSA, your employer can’t recover that amount from you due to the Uniform Coverage Rules for health FSAs.
You typically have to use the funds in your account within the year that you contributed them, or the funds go back to your employer. It’s a good idea to talk to your human resources department at work to determine when the funds in your account will expire so you can plan accordingly.
If your employer offers a carryover option, you can use your unused FSA dollars — up to the allowed limit — during the following year. Some employers may offer a grace period instead. This gives you extra time – typically 2.5 months – to use the funds in your account before they expire. Your employer is not allowed to offer both a grace period and a carryover option — so if they offer one, they won’t allow you to take advantage of the other benefit.
But if neither of the options are available, make sure you plan ahead to spend your money on FSA-eligible expenses before the end of the year.
How to spend your FSA
The IRS outlines qualified medical expenses in Publication 502. You can use your FSA funds to pay for deductibles, coinsurance, and copayments but not health insurance premiums. You can also use your dollars to pay for everyday items such as contact lenses and acne treatment, as long as they are medically necessary. Here are a few other FSA-eligible items you can spend your funds on before they expire:
Eye exams
Fertility tests
Transportation to medical appointments
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Can you use your FSA to pay for medications?
You can use your FSA to pay for your prescription medications as well as qualified over-the-counter medications such as Tylenol and Tums. If you want to maximize your FSA dollars, you can use your FSA with a free GoodRx coupon to save even more on popular medications. GoodRx allows you to comparison shop for your medications so you can get the best price in your area.
How to get reimbursed for your FSA
Some FSA providers offer an FSA debit card to help you pay for healthcare expenses. But if you pay for FSA-eligible expenses out of pocket, you’ll typically have to submit a claim to your FSA provider to receive reimbursement. You can only submit claims for expenses incurred during the plan year. You may need the following details to receive reimbursement:
Date of service
Amount spent
Provider
Type of expense
Receipt
The most common deadline to submit claims is around March 31, but your actual deadline may be different depending on your employer. It’s important to keep track of all receipts so that you can receive reimbursement for your qualified medical expenses and substantiate your purchases.
Will my 2023 FSA roll over to 2024?
Your FSA dollars may not automatically roll over. It depends on your employer.
The IRS allows you to roll over a certain amount of your FSA funds every year. In 2023, you can carry over up to $610 if your employer allows it. This means that if you don’t spend all the money in your FSA by the end of the plan year, for any reason, you can roll over up to $610 of it. The rest of the money goes back to your employer.
Year | Carryover amount for an FSA |
2024 | $640 |
2023 | $610 |
The bottom line
The FSA contribution limits increased from 2023 to 2024. For 2024, you can contribute up to $3,200 to an FSA. If you don’t use all the funds in your account, you may be able to roll over $640 to the next plan year if your employer allows it. It’s important to plan ahead and identify which qualified medical expenses you want to spend your FSA dollars on so you don’t lose any of your money.
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References
Internal Revenue Service. (2023). About Publication 502, medical and dental expenses.
Internal Revenue Service. (2023). IRS provides tax inflation adjustments for tax year 2024.
