Limits for FSAs, QSRHRAs, and More

A Flexible Spending Account (FSA) and a Health Savings Account (HSA) are both tax-advantaged tools for covering qualified medical expenses, but they differ in key ways. An FSA is employer-sponsored and does not require enrollment in a high-deductible health plan (HDHP), while an HSA requires HDHP coverage and is individually owned—meaning the balance follows the employee even after leaving a job. FSAs operate on a 'use it or lose it' principle, though a limited carryover or grace period may apply. HSA funds roll over indefinitely and can even be invested for retirement. Contribution limits are set annually by the IRS and differ between account types. Aurora Training Advantage's webinar on FSA and QSEHRA limits provides a thorough comparison with current-year limits and practical guidance on administering these benefits effectively.

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) allows eligible small employers—those with fewer than 50 full-time equivalent employees—to reimburse employees tax-free for individual health insurance premiums and other qualified medical expenses. Unlike a group health plan, the QSEHRA doesn't require the employer to select a single insurance product for all employees; instead, each employee can choose their own individual plan and the employer reimburses up to an IRS-set annual limit. Employees must maintain minimum essential coverage to receive reimbursements. QSEHRAs are a compelling option for small businesses that want to offer meaningful health benefits without the administrative complexity of a group plan. Aurora Training Advantage's webinar provides detailed guidance on QSEHRA eligibility, setup, and compliance requirements for employers.

A Dependent Care Flexible Spending Account (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care expenses so that the account holder can work or look for work. Eligible expenses include childcare for dependents under age 13, before- and after-school programs, summer day camps, and adult daycare for dependents who are physically or mentally incapable of self-care. The annual contribution limit is set by the IRS and differs from the health FSA limit. DCFSAs offer significant tax savings by reducing taxable income dollar-for-dollar. However, they cannot be used for overnight camps, tutoring, or kindergarten tuition. Funds generally must be used within the plan year. Aurora Training Advantage's webinar on FSA and reimbursement account limits clarifies eligible expenses, administrative rules, and current contribution limits for benefits administrators.

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded benefit that allows organizations of any size to reimburse employees tax-free for individual health insurance premiums and qualified medical expenses. Unlike a traditional group health plan where the employer selects one plan for all employees, an ICHRA gives each employee the freedom to choose their own insurance from the individual market or exchange. Employers can customize reimbursement amounts by employee class—offering different allowances to full-time versus part-time employees, for example. Employees who receive an ICHRA are generally not eligible for ACA premium tax credits. The ICHRA eliminates many administrative burdens of traditional group coverage while giving employers predictable fixed costs. Aurora Training Advantage's webinar offers detailed guidance on ICHRA design, participant eligibility, and operational compliance.

FSAs operate under a 'use it or lose it' rule—funds not spent by the plan year's deadline are typically forfeited. However, employers may offer one of two relief provisions: a grace period of up to two and a half months into the next plan year during which remaining funds can be used, or a carryover of up to a federally set annual limit into the following year. Employers cannot offer both options simultaneously. Participants should track their balances closely and plan qualifying purchases—prescription eyewear, dental care, medical equipment—before year-end to avoid forfeiture. The specific carryover and grace period rules vary by employer plan design. Aurora Training Advantage's webinar on FSA, QSEHRA, and HRA limits provides practical guidance on managing these accounts and communicating the rules effectively to plan participants.