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Health and Welfare

IRS Announces Some 2021 Cost-of-Living Adjustments for Welfare Benefit Plans

Today, the IRS issued Revenue Procedure 2020-45 which provides some of the 2021 cost-of-living adjustments for inflation as provided by the Internal Revenue Code. For plan sponsors of welfare benefit and fringe benefit plans, the most applicable adjustments announced in Revenue Procedure 2020-45 are listed in the following table:

Cafeteria Plan Limits and Thresholds
 
Health FSAs 2021 (new) 2020 (old)
Maximum Health FSA Salary Reductions $2,750 $2,750
Maximum carryover amount: $550 $550
Adoption Assistance 2021 (new) 2020 (old)
Maximum Exclusion for Employer-Provided Adoption Assistance $14,440* $14,300
Adoption Tax Credit Limit $14,440* $14,300
 

*The amount excludable from an employee’s gross income begins to phase out for taxpayers with modified adjusted gross income in excess of $216,660 and is completely phased out for taxpayers with modified adjusted gross income of $256,660 or more.

     
Consumer-Driven Health Care Limits and Thresholds
 
       
QSEHRAs 2021 (new) 2020 (old)
Maximum Reimbursement Allowed    
  Single $5,300 $5,250
  Family $10,700 $10,600
     
Fringe Benefit Limits and Thresholds
 
Adoption Assistance 2021 (new) 2020 (old)
Maximum Exclusion for Employer-Provided Adoption Assistance $14,440* $14,300
Adoption Tax Credit Limit $14,440* $14,300
 

*The amount excludable from an employee’s gross income begins to phase out for taxpayers with modified adjusted gross income in excess of $216,660 and is completely phased out for taxpayers with modified adjusted gross income of $256,660 or more.

     
Transportation Fringe Benefits 2021 (new) 2020 (old)
Parking $270/mo. $270/mo.
Transit Passes & Vanpooling (combined) $270/mo. $270/mo.
     
         

Earlier this year, the IRS released Revenue Procedure 2020-32 which contained the 2021 cost-of-living adjusted limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs). Here are the details:

Consumer-Driven Health Care Limits and Thresholds
 
       
HSAs 2021 (new) 2020 (old)
HDHP Minimum Annual Deductible    
  Individual $1,400 $1,400
  Family $2,800 $2,800
       
HDHP Out-of-Pocket Maximum    
  Individual $7,000 $6,900
  Family $14,000 $13,800
       
HSA Maximum Contribution Limit    
  Individual $3,600 $3,550
  Family $7,200 $7,100
       
HSA Contribution Limit $1,000 $1,000

 

Be sure to check www.nbsbenefits.com/limits for the latest information on all limits related to retirement, health, and welfare benefit plans as well as consumer-driven health care.