Benefits Buzz

2021 Flexible Spending Account & Other Limits

Posted on November 3rd, 2020

The Internal Revenue Service (IRS) released Rev. Proc. 2020-45 on October 26th with 2021 inflation adjustments for various provisions of the Internal Revenue Code (the “Code”). Included in the announcement are maximum contribution limits for Flexible Spending Accounts (FSAs) and other employee benefit programs. A summary of some of the 2021 contribution limits has been provided below.

Health Flexible Spending Accounts (Health FSAs)

$2,750 per plan year (unchanged from 2020)

Health FSA Carryover Limit

$550 (unchanged from 2020)

Commuter Plans

Parking: $270 per month (unchanged from 2020)

Mass Transit: $270 per month (unchanged from 2020)

Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs)

$5,300 per plan year for single-only coverage and $10,700 per plan year for family coverage (up from $5,250 for single-only coverage and $10,600 for family coverage in 2020).

While not specifically addressed in Rev. Proc. 2020-45, some other 2021 contribution limits of importance were also released earlier this year.

Health Savings Accounts (HSAs)

$3,600 for single-only coverage in the 2021 tax year and $7,200 for family coverage in the 2021 tax year (up from $3,550 for single-only coverage and $7,100 for family coverage in 2020). An additional catch-up contribution of $1,000 is also available to account holders who are age 55 or older. Contributions for the 2021 tax year can be made until April 15, 2022.

Dependent Care Assistance Programs (DCAPs)

$5,000 per calendar year ($2,500 per calendar year if married and filing taxes separately). Please note the DCAP contribution limits do not increase for inflation. These plans are sometimes referred to as Dependent Care Flexible Spending Accounts (Dependent Care FSAs).

Excepted Benefit Health Reimbursement Arrangements (EBHRAs)

$1,800 per plan year (unchanged from 2020)

 

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