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2023 Health FSA and Other Benefit Limits Announced

October 19, 2022

The IRS has announced the 2023 Health FSA and Other Benefit Limits. The limits for all plans outlined in the revenue procedure are increasing for 2023.
Alert

AT A GLANCE

  • The 2023 limits for:
    • Health FSA, including a Limited Purpose Health FSA = $3,050/yr
    • Health FSA maximum carryover of unused amounts = $610/yr
    • Qualified Transportation plans = $300/mo
    • Qualified Parking plans = $300/mo
    • Excepted Benefit HRA = $1,950/yr
    • Qualified Small Employer HRA (QSEHRA) increases to $5,850/yr for single coverage and $11,800/yr for family coverage

IRS Limit Increases to Health and Commuter Benefit Plans

IRS Revenue Procedure 2022-38 provides details about the annual inflation adjustments for more than 60 tax provisions, including contribution limits for Health FSAs and reimbursement limits for Qualified Transportation fringe benefit plans and Qualified Small Employer HRAs (QSEHRAs). The limits for all plans addressed in the revenue procedure are increasing for 2023.

Additionally, Revenue Procedure 2022-24 provides that the inflation-adjusted maximum dollar amount that may be made available for Excepted Benefit Health Reimbursement Arrangements (EBHRAs) in 2023 will increase to $1,950/yr.

Health FSA, Transportation, QSEHRA and EBHRA Plan Limits 2023 v. 2022

Benefit Plan20232022Change
Health FSA$3,050/year$2,850/year+ $200
Health FSA Carryover$610/year$570/year+ $40
Qualified Commuter and Transit
Benefits
$300/month$280/month+ $20
Qualified Parking$300/month$280/month+ $20
Qualified Small Employer Health
Reimbursement Arrangement
(QSEHRA)
$5,850/year for
single coverage
$11,800/year for
family coverage
$5,450/year for
single coverage
$11,050/year for
family coverage
+ $400
+ $750

Next Steps

With open enrollment season upon us, employers should review their open enrollment materials for accuracy and communicate any updates. Some open enrollment periods may have already ended, therefore, plans adopting the new limits may need to provide a limited special enrollment period to allow participants to make adjustments in light of the updated limits.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.

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