Many employee benefits are subject to annual dollar limits that are periodically increased for inflation. The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the annual dollar limits for various welfare and retirement plan limits for 2020. Although some of the limits will remain the same, most of the limits will increase for 2020.
The annual limits for the following commonly offered employee benefits will increase for 2020:
- High deductible health plans (HDHPs) and health savings accounts (HSAs);
- Health flexible spending accounts (FSAs);
- Transportation fringe benefit plans; and
- 401(k) plans.
Employers should update their benefit plan designs for the new limits and make sure that their plan administration will be consistent with the new limits in 2020. Employers may also want to communicate the new benefit plan limits to employees.
HSA & HDHP LIMITS
|HSA Contribution Limit|
|Self-only HDHP coverage||$3,500||$3,550||Up $50|
|Family HDHP coverage||$7,000||$7,100||Up $100|
(Not adjusted for inflation)
|Minimum deductible||Self-only coverage||$1,350||$1,400||Up $50|
|Family coverage||$2,700||$2,800||Up $100|
|Maximum out-of-pocket||Self-only coverage||$6,750||$6,900||Up $150|
|Family coverage||$13,500||$13,800||Up $300|
|FSA Contribution Limit|
|Health FSA (limit on employees' pre-tax contributions||$2,700||$2,750||Up $50|
|Dependent care FSA (tax exclusion)
(not adjusted for inflation)
|$5,000 ($2,500 if married and filing taxes separately)||$5,000 ($2,500 if married and filing taxes separately)||No Change|
TRANSPORTATION FRINGE BENEFITS
|Limit (monthly limits)||2019||2020||Change|
|Transit pass and vanpooling (combined)||$265||$270||Up $5|
ADOPTION ASSISTANCE BENEFITS
|Tax exclusion (employer-provided assistance)||$14,080||$14,300||Up $220|
QUALIFIED SMALL EMPLOYER HRA (QSEHRA)
|Payments and reimbursements||Employee-only coverage||$5,150||$5,520||Up $100|
|Family coverage||$10,450||$10,600||Up $150|
|Employee elective deferrals||$19,000||$19,500||Up $500|
|Catch-up contributions||$6,000||$6,500||Up $500|
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