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2020 IRS benefit limits for ICHRA, EBHRA, QSEHRA, FSA, HSA, more

Inflation-adjusted amounts for 2020 IRS benefit limits on employer-sponsored pre-tax and tax-free health plans are now available. Affected plans include the Excepted Benefit HRA, Qualfied Small Employer HRA, Health FSAs, Transit & Parking plans, and Adoption Assistance plans.

2020 benefit limits increase = more tax savings

2020 Inflation-adjusted limits

Most plans eligible for an annual cost-of-living adjustment (COLA) will see 2020 benefit limits increase from the previous year. We are still awaiting figures for the Dependent Care FSA.

The age 55+ catch-up allowance for HSAs is not eligible for the COLA increase. It remains at $1,000 from year-to-year.

Cafeteria Plans

A Section 125 Cafeteria Plan begins with a basic Premium-Only Plan to pre-tax premiums and builds on that with Flexible Spending Arrangements (Health, Limited, and Dependent Care) to cover out-of-pocket medical and dependent care expenses with pre-tax dollars and Health Savings Accounts (HSAs) that cover out-of-pocket medical costs plus build retirement savings with pre-tax salary deductions.

Employer contributions are counted in the total IRS limit for HSAs, but employer contributions to an FSA can match the employee’s annual election for a combined total up to twice the IRS limit.

Here are the 2020 IRS benefit limits for Cafeteria Plans, with historical information for comparison:

 Health Flexible Spending Arrangement (FSA)
2020 2019 2018 2017
Contribution allowed (annual limit) $2,750 2,700 $2,650 $2,600


 Dependent Care Assistance Plan (DCAP) 2020 2019 2018 2017
Married filing separately (per spouse) TBA $2,500 $2,500 $2,500
Married filing jointly TBA $5,000 $5,000 $5,000
Single or Head of Household TBA $5,000 $5,000 $5,000
TBA: 2020 amounts for DCAP FSAs yet to be announced but are likely to remain unchanged.

 


 Health Savings Account (HSA)
2020 2019 2018 2017
HDHP Minimum Deductible
Individual coverage $1,400 $1,350 $1,350 $1,300
Family coverage $2,800 $2,700 $2,700 $2,600
HDHP Out-of-Pocket Maximum
Individual coverage $6,900 $6,750 $6,650 $6,550
Family coverage $13,800 $13,500 $13,300 $13,100
HSA Maximum Annual Contribution
Individual coverage $3,550 $3,500 $3,450 $3,400
Family coverage $7,100 $7,000 $6,900 $6,750
Catch-up allowance (age 55+) $1,000 $1,000 $1,000 $1,000

Health Reimbursement Arrangements

Individual Coverage HRA

There is no limit on the ICHRA for either the amount of the benefit or the number of employees covered.

Excepted Benefit HRA

Companies offering a traditional employer-sponsored group health plan to employees may now provide an HRA to pay excepted benefits like dental and vision insurance premiums and, at the employer’s option, eligible medical expenses. Learn more about the new for 2020 EBHRA.

 Excepted Benefit HRA (EBHRA)
2020 2019 2018 2017
Maximum employer contribution $1,800 n/a n/a n/a

Qualified Small Employer HRA

The Qualified Small Employer Health Reimbursement Arrangement allows employers with fewer than 50 employees to provide assistance for the purchase of individual health coverage and out-of-pocket medical expenses. The QSE-HRA is entirely employer funded and requires employees to purchase a health plan providing minimal essential coverage before reimbursements can be made from the plan.

Below are the maximum amounts employers may provide for employees in 2020, based on coverage type:

 Qualified Small Employer HRA (QSEHRA)
2020 2019 2018 2017
Maximum HRA amount for employees with:
Individual coverage $5,250 $5,150 $5,050 $4,950
Family coverage $10,600 $10,450 $10,250 $10,000

Section 132 Commuter Plans

A Transit & Parking plan allows employees to set aside funds via pre-tax salary deductions to pay for transit passes, vanpooling, and parking necessary for them to work. Here are the 2020 monthly contribution limits for employees using a pre-tax Section 132 plan:

 Section 132 Commuter Plans (Transit & Parking)
2020 2019 2018 2017
Transit (monthly) $270 $265 $260 $255
Parking (monthly) $270 $265 $260 $260

Section 137 Adoption Plans

Employers help adoptive parents offset the expense of adopting a child with a Section 137 Adoption Assistance Plan.

 Adoption Assistance Plans
2020 2019 2018 2017
Annual limit for employer-sponsored plans $14,300 $14,080 $13,840 $13,570
Employee eligibility phase-out begins (annual salary*) $214,520 $211,160 $207,580 $203,540
Employee eligibility phase-out complete (annual salary*) $254,520 $241,160 $247,580 $243,540


*Modified adjusted gross income (MAGI).

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