FSA Limit & Plan Year Clarification

The IRS has just released Notice 2012-40 for Health Care Flexible Spending Accounts (FSAs) regarding the $2500 contribution limit that goes into effect for 2013 and deadlines for compliance. This guidance provides transition relief for FSA plans that run on a non-calendar year basis.

FSA Plan Year Clarified

• The $2,500 limit will not affect any plans beginning prior to January 1, 2013.    
• Fiscal plan years will not be impacted until the first plan year beginning on or after January 1, 2013.   
• Non-calendar plan years will have until the end of the 2014 calendar year to amend their plans to comply within the limit.
• Short plan years must prorate the $2,500 limit based on the number of months in the short plan year.    

$2,500 Contribution Limit Items of Note

• Applies to salary reductions (including cashable credits).
• Applies separately for each unrelated employer that an individual may be working for during the year.
• Does not apply to non-elective contributions that cannot be cashed out or received in the form of taxable benefits.
• Unused amounts carried over during a grace period are not counted toward the $2,500 limit.

Dental Health

Dental health planning is a valuable part of staying healthy, but it’s also a financial investment that helps employers and individuals save money.


Four out of ten Americans lack any kind of dental benefits. Without convenient access to affordable care, people often delay seeking treatment. Some end up seeking costly hospital care for preventable dental conditions, like a toothache progressing to a severe abscess. In Florida alone, the cost of dental-related ER visits was more than $88 million in 2010, according to the Pew Center.

“Anyone concerned about financial health should be ensuring employees have incentive for oral care because prevention and early detection makes a major difference in financial and clinical outcomes,” said Nicholas Kavouklis DMD.

A 2007 study published in the Journal of Periodontology showed that patients with severe periodontal disease had 21 percent higher healthcare costs than patients with healthy gums. The disease produces bacteria that enters the bloodstream and can exacerbate other conditions, including expensive lung and cardiovascular problems.

“Many diseases, including diabetes and cancers, will manifest symptoms in the mouth before they are evident elsewhere,” said Dr. Kavouklis. “A dentist can identify warning signs, uncover risks, and help employers and employees avoid high-dollar claims.”