Employee Health and Welfare Benefit Plan Limits | Seyfarth Shaw LLP


[co-author: Mary Kennedy]

The Internal Revenue Service (IRS) recently released 2022 cost of living adjustments applicable to dollar limits for health and welfare plans and employer-sponsored retirement plans.

The evolution of the 2022 cost-of-living adjustments for employer-sponsored health insurance and provident schemes is summarized in the table below:

Health and Wellness Plan Limits (Rev. proc. 2021-45 and Rev. proc. 2021-25) 2022 2021 Change
Maximum Health Flexible Spending Account (FSA Health) Salary Reduction Limit $2,850 $2,750 + $100
FSA Health Deferral Limit $570 $550 +$20
Eligible transportation benefits and eligible parking (monthly limit) $280 $270 +$10
Maximum amount excluded from the employee’s gross income for the adoption of a child with special needs under an adoption assistance program (AAP) $14,890 $14,440 + $450
Maximum amount excluded from an employee’s gross income for amounts paid by an employer for eligible adoption expenses through an AIP* $14,890 $14,440 + $450
High Deductible Health Plan (HDHP) Maximum annual out-of-pocket limit (excluding premiums) for personal coverage $7,050 $7,000 +$50
Maximum annual limit of HDHP disbursements (excluding premiums) for family coverage $14,100 $14,000 + $100
HDHP Minimum Annual Deductible for Personal Coverage $1,400 $1,400 Nothing
HDHP Minimum annual deductible for family coverage $2,800 $2,800 Nothing
Health Savings Account (HSA) annual contribution limit for personal coverage $3,650 $3,600 +$50
Annual HSA contribution limit for family coverage $7,300 $7,200 + $100
HSA catch-up contribution limit $1,000 $1,000 Nothing
Dependent Care Flexible Spending Account (Per Dependent Care FSA) ** Annual contribution limit for employees who are married and filing jointly or if employee is a single parent $5,000 $10,500 – $5,500
Annual FSA contribution limit for dependent care if employee is married but files separately $2,500 $5,250 – $2,750
Maximum amount made newly available for the plan year for an Excepted Health Benefits Reimbursement Arrangement (EBHRA) $1,800 $1,800 Nothing

* The amount that can be excluded from an employee’s gross income for amounts paid by an employer for eligible adoption expenses through an AIP begins to phase out in 2022 for taxpayers whose modified adjusted gross income exceeds $223,410 and is completely eliminated in 2022 for taxpayers with modified income. adjusted gross income of $263,410 or more.

** Dependent FSA limits are set by law and do not adjust for inflation, but dependent FSA limits were temporarily increased for 2021 only by the American Rescue Plan Act of 2021 due to the COVID-19 pandemic.

Changes to the 2022 cost of living adjustments for employer-sponsored pension plans are summarized in our previous article, Looking to save more? You’re lucky!

Employers sponsoring health and welfare plans and pension plans should take advantage of the new increased limits by making adjustments to plan administrative/operational procedures.

Previous Publication of the limits and thresholds of the IRS 2022 benefit plan
Next Inflation adjustments for benefit plan administration costs