Seyfarth Synopsis: The IRS has announced the adjustments to key limits for certain health and welfare benefit programs, including HDHP deductibles, HSA and FSA contributions, and other fringe benefit options for 2021.
The IRS issued new limits on health and fringe benefit options under Rev. Proc. 2020-32, Rev. Proc. 2020-45, and Notice 2020-84, which announce the 2021 limits for certain benefit programs, including dollar limits for contributions to health savings plans ("HSAs") under high deductible health plans ("HDHPs"), flexible spending accounts ("FSAs") under Section 125 cafeteria plans, qualified transport fringe benefit programs, Qualified Small Employer Health Reimbursement Accounts ("QSEHRAs"), and the new PCORI fee.
While some of the limits have not changed, there are a few notable increases. A summary of the key limits for employers to note for 2021 are included in the table below:
Benefit Programs and Limits:
Health Savings Accounts (HSAs)
- Maximum HSA contribution:
Self-only: 2020 Limit: $3,550; 2021
Limit: $3,600
Family: 2020 Limit: $7,100; 2021 Limit: $7,200
- HDHP annual deductible minimum:
Self-only: 2020 Limit: $1,400; 2021
Limit: $1,400
Family: 2020 Limit: $2,800; 2021 Limit: $2,800
- Maximum Out-of-pocket:
Self-only: 2020 Limit: $6,900; 2021
Limit: $7,000
Family: 2020 Limit: $13,800; 2021 Limit:
$14,000
- Health FSA Maximum Contribution
2020 Limit: $2,750; 2021 Limit: $2,750
- Maximum Carryover of unused amounts
2020 Limit: $550; 2021 Limit: $550
- Qualified Transportation Fringe
Parking (monthly): 2020 Limit: $270; 2021
Limit: $270
Transit passes and Vanpools (monthly): 2020 Limit:
$270; 2021 Limit: $270
-Adoption Assistance
Employer Provided Maximum: 2020 Limit:
$14,300; 2021 Limit: $14,400
Individual Maximum: 2020 Limit: $14,300;
2021 Limit: $14,400
- Qualified Small Employer Health Reimbursement
Arrangement (QSEHRA)
Self-Only Maximum: 2020 Limit: $5,250;
2021 Limit: $5,300
Family Maximum: 2020 Limit: $10,600; 2021
Limit: $10,700
- PCORI Fee*
2020 Limit: $2.54; 2021 Limit: $2.66
* For plan years ending on or after October 1, 2020 and before
October 1, 2021.
Rev. Proc. 2020-45 provides other limits that may impact benefit offerings, including the 2021 premium tax credits and small business health care tax credit. The revised limits provided in Rev. Proc. 2020-32 and Rev. Proc. 2020-45 took effect as of January 1, 2021.
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