IRS Releases Cost of Living Adjustments: Certain Benefit Limits for 2018

The IRS released IRS Revenue Procedure 2017-58 and Notice 2017-64 which provides the 2018
cost-of-living adjustments for inflation for certain items.

Taxable Years Beginning in 2018     Taxable Years Beginning in 2017
Limit on voluntary employee
salary reduction contributions
to a health flexible spending
arrangement (Section 3.16 of
Rev. Proc. 2017-58)
$2,650 $2,600
Monthly Limit on fringe benefit
exclusion for transit and parking
(Section 3.17 of Rev. Proc.
2017-58)
$260 $255
Maximum exclusion for
qualified adoption
expenses furnished pursuant to
an adoption assistance program
(Section 3.19 of Rev. Proc.
2017-58)
$13,840 $13,570
Maximum reimbursement from
qualified small employer
health reimbursement
arrangement (QSEHRA) (Section
3. 56 of Rev. Proc. 2017-58)
$5,050
$10,250
$4,950
$10,050

Paired Plan Health Reimbursement Arrangement

Published:  07/17/17

Value Propositions in Integrated Plan Design and Incenting Participants to Cost Effective Providers

Health Reimbursement Arrangements or Plans (HRAs) are authorized under Internal Revenue Code Section 105(h) and various other Codes and Regulations. They have been permissible since 1954.  Historically, they were established as separate, employer funded health plans or supplements to health plans.  They are permitted to reimburse for health and related expenses under IRC Section 213 (health, dental, vision, and other expenses).  This is the same eligibility list as has been established for permitted reimbursement under Flexible Spending Accounts (with some exceptions).  HRAs can be designed to reimburse or directly pay providers for selected services, narrowly drawn or broad-based and under specific plan design provisions contained in the plan document.  They are ERISA health plans and are also governed by COBRA, HIPPA, and other Federal rules pertinent to health care plans.  HRAs are solely funded by employer contributions.

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What’s Trending in Tax Preferred Health Accounts after ACA?

Sponsors continue to be interested in health benefit strategies that move away from “first-dollar/low deductible” PPO and indemnity options in favor of employee options that are more cost effective and carry lower payroll costs for employees. This is the noted trend on Consumer Driven Health Care Plans (CDHP).

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IRS Announces New Limits for 2018 (HSA)

Health Savings Accounts
Starting in 2007, the Tax Relief and Health Care Act of 2006 (TRHCA) requires that the IRS release new HSA limits prior to June 1st.  Here are the 2018 HSA limits:

Individual 2017 Limit 2018 Limit
Annual contribution limit $3,400 $3,450
Minimum deductible for HDHP $1,300 $1,350
Maximum out-of-pocket for HDHP $6,550 $6,650
Family
Annual contribution limit $6,750 $6,900
Minimum deductible for HDHP $2,600 $2,700
Maximum out-of-pocket for HDHP $13,100 $13,300
Age 55 to 65
Annual catch-up contribution limit $1,000 $1,000

 

IRS Announces New Limits for 2017 (FSA/QTP)

Flexible Spending Accounts
The limit for Medical received an increase of $50 for 2017.  The new maximum contribution for 2017 is $2,600. The limit for Dependent Care remains at $5,000 for 2017.

Qualified Transportation Plans
Transit and Parking maximum benefits remain at $255 per month.