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Employers often ask about different rules surrounding annual contribution limits for health flexible spending accounts (HFSAs), dependent care assistance programs (DCAPs), and health savings accounts (HSAs) when an employee joins the employer’s plan mid-plan year.

For HFSAs, employees who join mid-plan year may elect to make up to the full annual contribution limit ($3,050 for 2023), even if they previously contributed to an HFSA under another employer’s plan.

For HSAs, contribution maximums are determined on a calendar year basis and are generally calculated on a monthly basis for each month that an individual has qualified high deductible health plan (HDHP) coverage in place. If an individual has HDHP coverage for part of the year, they may contribute 1/12 of the annual statutory maximum for each month of coverage.

For DCAPs, contributions apply on a calendar year basis and per family, rather than per plan. An individual who enrolls in a DCAP midyear may be able to make the full allowable contribution as long as contributions are not made to another employer’s DCAP for the same calendar year. The maximum calendar year contribution for a DCAP per household is $5,000.

Employers should take care to apply the different annual contribution rules correctly when a plan participant joins an employer plan midyear.