Section 10902

SEC. 10902. INFLATION ADJUSTMENT OF LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS UNDER CAFETERIA PLANS.

[a] In General- Subsection [i] of section 125 of the Internal Revenue Code of 1986, as added by section 9005 of this Act, is amended to read as follows:

'[i] Limitation on Health Flexible Spending Arrangements-

'[1] IN GENERAL- For purposes of this section, if a benefit is provided under a cafeteria plan through employer contributions to a health flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement.

'[2] ADJUSTMENT FOR INFLATION- In the case of any taxable year beginning after December 31, 2011, the dollar amount in paragraph [1] shall be increased by an amount equal to--

'[A] such amount, multiplied by

'[B] the cost-of-living adjustment determined under section 1[f][3] for the calendar year in which such taxable year begins by substituting 'calendar year 2010' for 'calendar year 1992' in subparagraph [B] thereof.

If any increase determined under this paragraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.'.

[b] Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2010.