What to Know About Flex Account Contribution Limits

I understand that the contribution limit for a medical flexible-spending account will drop to $2,500 in 2013. Is that the limit per household or for each working spouse? Our family’s out-of-pocket medical expenses average about $4,000 a year. Can I contribute $2,500 to my FSA at work and my wife $1,500 through her employer? Can I use money from my FSA for some of her expenses? And is the $5,000 limit for dependent-care FSAs per person or per family?

The $2,500 limit for medical flexible-spending accounts is per person per plan rather than per household, so if you and your wife both have FSAs through your jobs, you can each contribute up to $2,500 in pretax money to your FSA accounts. You can use the money from either spouse’s FSA on out-of-pocket medical expenses (but not premiums) for any family member, including eligible dependents. Most plans even let you use medical FSA money for medical expenses for children through the year they turn age 26, whether or not they are covered under your health insurance or considered to be dependents for tax purposes. Check with your plan to see if it allows you to do so, says Jody Dietel, chief compliance officer for WageWorks, which administers FSA plans.

The contribution rules are different for dependent-care FSAs. That $5,000 limit applies per family if you are married filing jointly or if you are a single parent (or $2,500 each if you are married filing separately). So if both you and your wife are offered dependent-care FSAs at work, be careful not to exceed the limit when you sign up during open-enrollment period.

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For more information about both types of flexible-spending accounts, including a list of eligible expenses, see WageWorks’ SaveSmartSpendHealthy.com. Also see our New Limits on Flex Accounts Coming, Upgrade Your Benefits During Open Enrollment and 7 Smart Uses for Your Flex-Account Money.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.