For plan years beginning on and after January 1, 2013, health care flexible spending accounts ("FSAs") will have an annual contribution limit of $2,500 per participant. While this change takes effect in only a few weeks, plan sponsors will have until December 31, 2014 to amend their plans to account for such limit. 

The $2,500 limit applies only to employees' salary reduction contributions and not to employer contributions, such as flex credits. In addition, the limit on salary reduction contributions applies on an individual basis, so that spouses employed by the same employer may each elect to contribute up to $2,500. If a cafeteria plan provides for a grace period during which participants may continue to incur claims against contributions made during the prior year, the unused prior year contributions that are carried over for the grace period will not count against the $2,500 limit applicable to the current year.

Employers should take appropriate steps to ensure that elections for salary contributions to health care FSAs are appropriately limited.