Bill > S1491

Introduced Session

This bill requires that the limitation on the amount of any reduction in a public employee's salary for the purpose of contributing to a flexible spending account (FSA) must be the limitation as adjusted for inflation annually, provided in federal law. This bill applies to employees and employers of the State, local governments, and school districts. FSAs are benefit plans established by employers to reimburse employees for health care expenses such as deductibles, copayments, and unreimbursed medical expenses that would be deductible under the Internal Revenue Code, but not for health insurance or long-term care insurance premiums. FSAs are usually funded by employees through "salary reduction agreements," although employers are permitted to contribute as well. The contributions to and withdrawals from FSAs are tax-exempt. Prior to 2010, the Internal Revenue Code imposed no dollar limit on FSA contributions, but employers could. In 2010, the Affordable Care Act limited the annual FSA contribution to $2,500 commencing in 2013. Section 125 of the federal Internal Revenue Code, 26 U.S.C. s.125(i), was later amended in 2013 to provide an adjustment for inflation beginning in any taxable income year after December 31, 2013. For the taxable year beginning in 2024, the dollar limitation under section 125(i) on voluntary employee salary reductions for contributions to FSAs is $3,200. If this bill becomes law, then the limitation on a public employee's FSA contributions will be adjusted as of the effective date of this bill, and annually thereafter.

AI Summary

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Joe Cryan (D)*,  Shirley Turner (D)*, 

Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee (on 01/13/2026)

Official Document