Health care flexible spending accounts (FSA) are benefit plans established by employers to reimburse employees for qualified health care expenses. The plans are relatively simple to establish and maintain and are usually funded through elective employee salary reductions as part of a cafeteria plan. Qualified contributions into and reimbursements out of an FSA are tax-exempt. The purpose of setting up an FSA is to allow employees to pay on a pre-tax basis for medical expenses incurred by them or their dependents that are not paid for by other health plan coverage, such as co-payments and deductibles. Although these plans are not new, there are certain new plan requirements that must be met for the benefit to be tax-exempt.

The Patient Protection and Affordable Care Act established a maximum contribution of $2,500 to an FSA for plan years beginning after December 31, 2012. The limit will be indexed for inflation for plan years beginning after December 31, 2013. An annual limit below the maximum can be imposed by the FSA. Plans have until December 31, 2014 to adopt an amendment to reflect the $2,500 limit but must operate in accordance with the new requirement in 2013.