Skip to main content

December 2023 Benefits Buzz: IRS employee benefit plan limits

irs employee benefit plan limits

IRS Announces Employee Benefit Plan Limits for 2024

On Nov. 9, 2023, the 2024 IRS employee benefit plan limits were released. Employers should review the increase in annual dollar limits, as many employee benefits are subject to annual dollar limits that are updated for inflation before the beginning of each calendar year. Note that some benefit limits are not adjusted for inflation, such as the contribution limit for dependent care flexible spending accounts and the catch-up contribution limit for health savings accounts.

Employers should confirm that payroll systems are updated for the 2024 limits and that the new limits are communicated to employees. The following benefit limits apply for 2024:

HSA Contributions

  • Single coverage: $4,150 (up $300 from 2023)
  • Family coverage: $8,300 (up $550 from 2023)
  • Catch-up contributions: $1,000 (not adjusted for inflation)

Health FSA Limits

  • Employee pre-tax contributions: $3,200 (up $150 from 2023)
  • Carryover of unused funds: $640 (up $30 from 2023)

Dependent Care FSA Contributions

  • $5,000 or $2,500 if married and filing taxes separately (not adjusted for inflation)

401(k) Contributions

  • Employee elective deferrals (pre-tax and Roth contributions): $23,000 (up $500 from 2023)
  • Catch-up contributions: $7,500 (no change from 2023)

Transportation Fringe Benefits

  • Monthly limits: $315 (up $15 from 2023)

Cost-sharing limits for 2025 released

On Nov. 15, 2023, the Centers for Medicare and Medicaid Services released the maximum limits on cost sharing for 2025 under the Affordable Care Act. For 2025, the maximum annual limitation on cost sharing is $9,200 for self-only coverage and $18,400 for family coverage. This represents an approximately 2.6% decrease from the 2024 limits of $9,450 for self-only coverage and $18,900 for family coverage.

The ACA requires most health plans to comply with annual limits on total enrollee cost sharing for essential health benefits. These cost-sharing limits are commonly referred to as an out-of-pocket maximum. Once the out-of-pocket maximum is reached for the year, the enrollee cannot be responsible for additional cost-sharing for EHBs for the remainder of the year.

CMS annually adjusts the ACA’s out-of-pocket maximum for inflation and publishes the limits by January of the year preceding the applicable benefit year. The ACA’s cost-sharing limits apply to all non-grandfathered health plans.

Any out-of-pocket expenses required by or on behalf of an enrollee with respect to EHBs must count toward the cost-sharing limit. This includes deductibles, copayments, coinsurance and similar charges but excludes premiums and spending for noncovered services. Health plans that use provider networks are not required to count an enrollee’s expenses for out-of-network benefits toward the cost-sharing limit.

Need help with benefit or cost-sharing limits?

As an employer, you have so many tasks to juggle before the end of the year. If you need assistance deciphering cost-sharing or IRS employee benefit plan limits, feel free to reach out to our team of experts today! We’ll be here to answer any questions you may have.

Popular posts from this blog

COVID-19: Retirement and Benefit Plan Resources

As the COVID-19 crisis continues to unfold, we are closely monitoring news and updates from top sources. We’ll be updating this section as new developments unfold. Here are several key articles and links to help plan sponsors and administrators navigate the COVID-19 impact to retirement and benefit plans: Retirement Plans 4 Key CARES Act Provisions for Retirement Plan Sponsors Markets React to Coronavirus   Important Considerations for Retirement Plan Sponsors during the Coronavirus Pandemic In Fed We Trust Participant Education Services: Timely Help from a Safe Distance CRDs 100% Taxable for New York State and Local Income Tax Purposes in 2020 IRS Permits Remote Notarization of Participant Elections   Employee Benefits CARES Act Expands Health Coverage Rules Understanding the Historic $2 Trillion Stimulus Package Employee Compensation and Benefits During Closures and Furloughs DOL Clarifies Exemptions to Coronavirus Paid Leave Laws Small Business Exemption to

SECURE 2.0 Discussion Series: Session One

SECURE 2.0 provisions: What we know and what’s still up in the air The SECURE 2.0 Act, signed into law in late December 2022, has factored heavily in retirement industry discourse since the final legislation was published. As with any legislation of this depth and breadth, there’s a lot to digest and the industry takes time to adjust. Our team of experienced advisors recently met to discuss some of the more nuanced provisions of the legislation, such as changes to Roth contributions, and what they could mean for plan sponsors. Panel participants included the following HBS team members: Noah Buck, Christina Bauer-Dobias, Sean Bayne, Vincent Bocchinfuso and Kathleen Coonan. Highlights of our panel’s conversation below should serve to help guide plan sponsor thinking. On Roth employer contributions NB – In addition to deferring pre-tax or Roth, plan sponsors can now allow employer contributions to be classified as Roth, is that right? VB – Correct. This is immediately available to plan s

SECURE 2.0 Discussion Series: Session Two

The retirement industry has been buzzing since the SECURE 2.0 Act was signed into law last December. This new, comprehensive legislation has sparked a lot of discussion. As with any major reform, it will take time for the industry to fully adapt and understand all its implications. Following our April 11 webinar on the first three months of the industry’s response, our team reconvened to discuss some of what we have heard from our client and vendor partners and to respond to some of the great questions we heard from attendees. Panel participants included the following HBS team members: Noah Buck, Christina Bauer-Dobias, Sean Bayne, Vincent Bocchinfuso and Kathleen Coonan. The Discussion SB – Throughout the webinar, I wanted to stress two things: 1) confusion about where to start and what is expected from plan sponsors is normal; and 2) even more than three months in, this is a developing situation and people should expect changes as time goes on. With those in mind, engagement through