Limits on Employer Contributions to LPFSAs
Since employer contributions are set at the company level during plan setup, employees may elect a lower LPFSA contribution than their employer. If the employer's contribution is greater than the employee's contribution, and the employee contributes:
- more than $500, the employer can only match the lower employee contribution.
- less than $500, the employer can contribute up to $500.
Employer contribution amounts are set during company plan enrollment, and cannot be changed until the end of the plan year.
Non-elective employer contributions to the LPFSA, such as an employer match, seed contributions or flex credits, generally do not count toward the limit.
Let's consider some examples:
|Employee Contribution||Employer Contribution||Combined Amount Applied to LPFSA|
|$1000||$1500 (not a match; only $1000 applies)||$2000|
|$1000||$500 (less than employee)||$1500|
|$300||$500 (not a match, but acceptable)||$800|
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