The Internal Revenue Service announced on October 18 the annual inflation adjustment for over 60 tax provisions for 2023.

Some of the benefit limits for 2023 include the following:

1. The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) increased to $3,050.
2. The maximum carryover amount for cafeteria plans that permit carryover of unused amounts has increased to $610.
3. The dollar amount for the employee health insurance expense of small employers increased to $30,700. This amount is used under § 45R(c) for limiting the small employer health insurance credit and under § 45R(d)(1)(B) for determining who is an eligible small employer for purposes of the credit.
4. The monthly limitation for qualified transportation fringe benefit regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass increased to $300. The monthly limit for qualified parking is also $300.
5. The limitations regarding eligible long-term care premiums includible in the term "medical care" are increased as follows:

   Attained Age Before the Close of the Taxable Year	Limitation on Premiums
   40 or less	$480
   More than 40 but not more than 50	$890
   More than 50 but not more than 60	$1,790
   More than 60 but not more than 70	$4,770
   More than 70	$5,960

6. The deductible and out-of-pocket limits for high deductible health plans (HDHPs) for Medical Savings Accounts are as follows:
   • For self-only coverage: A health plan with an annual deductible that is no less than $2,650 and no more than $3,950 and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $5,300.
   • For family coverage: A health plan with an annual deductible that is between $5,300 and $7,900 and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $9,650.
7. The total dollar amount of payments and reimbursements for any year under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) cannot exceed $5,850 ($11,800 for family coverage).

The table below identifies updates to the 2023 health and fringe benefit plan limits addressed in the notice:

Benefit	2022	2023
Maximum Annual Employee Contribution to a Health FSA	$2,850	$3,050
Health FSA Carryover Limit	$570	$610
Maximum Annual Employer Contributions to QSEHRA	$5,450 (self-only coverage) $11,800 (family coverage)	$5,850 (self-only coverage) $11,800 (family coverage)
Maximum Monthly Benefit for Qualified Transit Passes, Van Pool Services, and Qualified Parking	$280	$300

 

Resource:  Larry Grudzien