The Internal Revenue Service released new limits on consumer-directed spending accounts that are applicable to plan years beginning after January 1, 2025. Plan sponsors should take these new limits into consideration as they finalize their benefit packages for the new year. By allowing employees to make elections up to the maximum allowed by the IRS, employers maximize the tax benefits to both their employees and themselves. With the rising costs of healthcare, this is more important than ever.
Selected limits are described below, and the full list of limit changes may be found in IRS Procedure 2024-40. Plan sponsors should consult with their plan administrators to coordinate the accommodation of the new limits, including the amendment of their plan document if that is necessary.
- The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) is increased to $3,300.
- If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is increased to $660.
- The monthly limitation for qualified transportation fringe benefit regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is increased to $325. The monthly limit for qualified parking is also $325.
- The maximum contribution limits to a health savings account (HSA) are increased as follows:
- Self-Only Coverage: $4,300
- Family Coverage: $8,550
- The deductible and out-of-pocket limits for “high deductible health plans” for Medical Savings Accounts are as follows:
- For self-only coverage, a health plan that has an annual deductible that is not less than $2,850 and not more than $4,300, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $5,700.
- For family coverage, a health plan that has an annual deductible that is not less than $5,700 and not more than $8,550, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $10,500.
- The dollar total amount of payments and reimbursements for any year under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) cannot exceed $6,350 ($12,800 for family coverage).
How We Can Help
At PS Administrators, we excel in managing consumer-driven health plans and ensuring they align with IRS regulations. Our expertise helps clarify the complex rules surrounding medical expenses, allowing you to make informed decisions about your health spending. Contact us to safeguard your health investments and maintain the integrity of your health spending plan.
