To avoid costly penalties and administratively burdensome correction procedures, plan sponsors must remain up-to-date with respect to applicable Health and Welfare plan limits. Today, November 7, 2019, the IRS announced cost-of-living adjustments affecting the 2020 dollar limitations for Health and Welfare plans and other related Health and Welfare Benefits items. We’ve included some of the most commonly used business benefits below. For complete details on all changes, please see IRS publication Rev. Proc. 2019-44.
Health and Welfare Plan Inflation-Adjusted Limits for 2020
Item
IRS Code Section
2020 Limit
2019 Limit
Note
Adoption Credit
23(a)
$14,300
$14,080
The credit begins to phase out for taxpayers with modified adjusted gross income more than $214,520.
Employee Health Insurance Expense of Small Employers
45R
$27,600
$26,600
The limit of $27,600 is used in calculations to determine the actual credit for an employer.
Cafeteria Plans
125
$2750
$2,700
Limit on voluntary employee salary reductions for contributions to health FSA.
Dependent Care Assistance Program
129 & 21
$5,000 –
married employee
$2,500 – single employee
(no change)
$5,000 –
married employee
$2,500 – single employee
Employee’s exclusion from income for payments under a DCAP in a calendar year
Qualified Transportation Fringe Benefit
132(f)
$270 limit on commuter highway vehicle
$270 limit on qualified parking
$260 limit on commuter highway vehicle
$260 limit on qualified parking
Monthly limit on the amount that may be excluded from an employee’s income for qualified transportation benefits.
Adoption Assistance Programs
137
$14,300
$14,080
The credit begins to phase out for taxpayers with modified adjusted gross income more than $214,520.
Health Savings Account (HSA)
223(b)
$3550 –
employee only
$7100 – family
$3,500 –
employee only
$7,000 – family
Maximum Annual Contribution
HSA Catch-Up (age 55 and older) *
223(b)
$1,000
(no change)
$1,000
Annual Catch-Up Contribution Limit
High Deductible Health Plans (HDHP)
223(c)
$1400 –
employee only
$2800 – family
$1,350 –
employee only
$2,700 – family
Minimum Annual Deductible Limits
HDHP Out-of-pocket Maximum
223(c)
$6900 –
employee only
$13,800 – family
$6,750 –
employee only
$13,500 – family
Annual Maximum
Affordable Care Act (ACA) Cost-Sharing Out-of-pocket Maximum
223
$8150 –
employee only
$16,300 – family
$7,900 –
employee only
$15,800 – family
Overall Annual Cost-Sharing Limits for Health Plans
* Applicable for HSA-eligible individuals who have attained age 55 by the end of the taxable year.Hall Benefits Law, LLC recommends that you consult with ERISA legal counsel to assist you with any questions you may have regarding applicable limits for your Health and Welfare Benefits plans.
This content is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under rules of certain jurisdictions.
