ConnectYourCare Announces 2021 IRS Limits for FSA, Commuter Benefits, and Adoption Assistance

A health care FSA lets account holders use pre-tax dollars for medical expenses. Eligible expenses include deductibles, copays, dental, vision, prescriptions, and family members’ medical care, regardless of their health coverage. The 2021 FSA contribution limit will be $2,750, which is unchanged from 2020.

Health care FSA funds may generally be used to reimburse expenses incurred during the year, with any remaining balance forfeited. However, there is an exception that lets employees roll over unused health care FSA contributions to the next year—if the employer offers this option—without reducing the amount of contributions for the next year.

Earlier in 2020, the IRS announced in Notice 2020-33 that the maximum rollover limit for health care FSAs was increased from $500 to $550.

Learn more about health care FSAs.

Commuter benefits, also known as known as qualified transportation fringe benefits, allow users to set aside pre-tax dollars for work transportation costs, including fare cards, vouchers, and shared rides. The 2021 commuter benefit contribution limit will be $270, just as it was in 2020.

Learn more about commuter benefits.

Adoption assistance gives employees tax relief when they are adopting a child. For 2021, the amount that can be excluded from an employee’s gross income for the adoption of a child is $14,440. This is $140 more than in 2020, when it was $14,300.

Learn more about adoption assistance.