Home / Benefit limits for 2021: FSA, HSA, QSEHRA, more -- IRS
2021 benefit limits for ICHRA, EBHRA, QSEHRA, FSA, HSA, more — IRS
The Internal Revenue Service has released 2021 annual inflation-adjusted benefit limits for tax-favored employee benefits, including the Individual Coverage HRA, Excepted Benefit HRA, Qualified Small Employer HRA, Health FSAs, Transit & Parking plans, and Adoption Assistance plans.
Tax-saving benefit plans may be adjusted annually by the IRS.
2021 Inflation-adjusted limits
Revenue Procedure 2020-45 lists inflation-adjusted limits for tax-saving employee benefit plans in 2021.
There is no adjustment for 2021 to the dollar limitation for employee salary reductions for contributions to a health flexible spending arrangement (FSA) or qualified transportation benefit.
The annual carryover amount maximum is raised to $550 for the new year, a $50 increased from 2020.
Earlier in the year, Revenue Procedure 2020-32 announced an increase in the contribution limit and out-of-pocket maximum for 2021 health savings accounts; the minimum deductible and age 55+ catch-up allowance for 2021 are unchanged.
All of these amounts are updated in the tables below.
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.
New for 2021, the maximum carryover allowance for employers choosing that option is now adjustable each year.
Here are the 2021 benefit limits for Cafeteria Plans, with historical information for comparison:
Health Flexible Spending Arrangement (FSA)
|
2021 |
2020 |
2019 |
2018 |
| Contribution allowed (annual limit) |
$2,750 |
$2,750 |
2,700 |
$2,650 |
| Maximum carryover allowance (at employer’s option) |
$550 |
$500 |
$500 |
$500 |
| … |
| Dependent Care Assistance Plan (DCAP) |
2021* |
| Married filing separately (per spouse) |
$2,500 |
| Married filing jointly |
$5,000 |
| Single or Head of Household |
$5,000 |
| *The DCAP FSA contribution limit is set by law and does not change from year to year. |
| … |
Health Savings Account (HSA)
|
2021 |
2020 |
2019 |
2018 |
| HDHP Minimum Deductible |
|
|
|
|
| Individual coverage |
$1,400 |
$1,400 |
$1,350 |
$1,350 |
| Family coverage |
$2,800 |
$2,800 |
$2,700 |
$2,700 |
| HDHP Out-of-Pocket Maximum |
|
|
|
|
| Individual coverage |
$7,000 |
$6,900 |
$6,750 |
$6,650 |
| Family coverage |
$14,000 |
$13,800 |
$13,500 |
$13,300 |
| HSA Maximum Annual Contribution |
|
|
|
|
| Individual coverage |
$3,600 |
$3,550 |
$3,500 |
$3,450 |
| Family coverage |
$7,250 |
$7,100 |
$7,000 |
$6,900 |
| 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 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 EBHRA.
Excepted Benefit HRA (EBHRA)
|
2021 |
2020 |
2019 |
2018 |
| Maximum employer contribution |
$1,800 |
$1,800 |
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 QSEHRA 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 2021, based on coverage type:
Qualified Small Employer HRA (QSEHRA)
|
2021 |
2020 |
2019 |
2018 |
| Maximum QSE-HRA amount for employees with: |
|
|
|
|
| Individual coverage |
$5,300 |
$5,250 |
$5,150 |
$5,050 |
| Family coverage |
$10,700 |
$10,600 |
$10,450 |
$10,250 |
| … |
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.
The 2021 monthly benefit amount is unchanged from the previous year.
Section 132 Commuter Plans (Transit & Parking)
|
2021 |
2020 |
2019 |
2018 |
| Transit (monthly) |
$270 |
$270 |
$265 |
$260 |
| Parking (monthly) |
$270 |
$270 |
$265 |
$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
|
2021 |
2020 |
2019 |
2018 |
| Annual limit for employer-sponsored plans |
$14,400 |
$14,300 |
$14,080 |
$13,840 |
| Employee eligibility phase-out begins (annual salary*) |
$216,660 |
$214,520 |
$211,160 |
$207,580 |
| Employee eligibility phase-out complete (annual salary*) |
$256,660 |
$254,520 |
$241,160 |
$247,580 |
| *Modified adjusted gross income (MAGI) |
|
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