Template: Submit FSA Information HR Communication
For employers that offer flexible savings accounts (FSAs) to employees, one key detail to keep in mind is that often FSA funds don’t roll over from year to year. Use this HR communication template to remind your employees to make the most of their FSA dollars—and submit their receipts—before they expire at the end of the year.
What is a Flexible Savings Account (FSA)?
Flexible spending accounts, also called flexible savings arrangements, allow employees to set aside pre-tax funds for healthcare expenses or dependent care expenses. Employees decide how much is put into their FSA, up to a limit.
FSAs are similar to health savings accounts (HSAs) in some regards, but there are three key differences between the two:
- HSA funds roll over year to year, while FSAs tend to expire at the end of the calendar year (or at the end of the plan year), though there may be a carryover or grace period, depending on the plan
- Employers and employees can contribute to HSAs and FSAs, but there are limits to what an employer can contribute to an FSA based on what an employee contributes
- Unlike HSAs, you do not have to be a member of a high deductible health plan to contribute to an FSA
2021 FSA Contribution Limits
The IRS announced no changes to FSA contribution caps for 2021. The maximum carryover amount is $550.
|Dependent Care FSA Max (for individuals or married couples filing jointly)||$5,000||$5,000|
|Dependent Care FSA Max (for married persons filing separately)||$2,500||$2,500|
Template: Submit FSA Information Update Communication
Use the following template to remind employees to make the most of their FSA funds before the end of the year:
As a reminder, individuals who use [company]’s FSA benefit must spend these dollars before the end of the year or risk the tax-advantaged funds expiring. Please also remember to submit all relevant FSA receipts by the end of the year.
Employees who want to use their funds before they expire can review the plan documents [link] to find services and products that are eligible for purchase with FSA dollars. We also recommend reviewing FSAstore.com for other ideas to make the most of your funds.
Additionally, the IRS announced no changes to FSA contribution caps in 2021, with the maximum carryover amount remaining at $550. Please review the following amounts when planning for the upcoming year:
- Contribution Max – $2,750
- Dependent Care FSA Max (for individuals or married couples filing jointly) – $5,000
- Dependent Care FSA Max (for married persons filing separately) – $2,500
If you want to update their contribution amount for 2021, please contact [contact information] or make adjustments to your elections using [name of HRIS].
If you have any questions about FSAs or other benefits, please contact [contact information].
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