The IRS has released new inflation-adjusted amounts for 2015. Typically updated annually to reflect cost-of-living adjustments, the latest adjustments include salary deduction tax limits for many employer-sponsored benefits.
The tax items for the 2015 tax year of greatest interest to health and welfare plan sponsors include the following dollar amounts:
FSAs. The annual plan year dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSAs) has increased to $2,550 for the 2015 year, up from $2,500 in 2014. The limit for a dependent care FSA will remain $5,000 for an individual or married couple filing a joint tax return, or $2,500 per person for those married and filing separately.
Transportation limit changes. The 2015 monthly limit on the amount that may be excluded from an employee’s income for qualified parking benefits remains the same at $250 per month. The combined monthly limit for transit passes and vanpooling (commuter highway) is also unchanged at $130 for 2015.
Adoption credit. The maximum that can be excluded from an employee’s income under an employer-provided adoption assistance program rises to $13,400 (from $13,190). The credit begins to phase out for taxpayers with modified adjusted gross income in excess of $201,010 (from $197,880 in 2014) and is completely phased out for taxpayers with modified adjusted gross income of $241,010 (from $237,880 in 2014 ) or more.
Long-term care. The limitations regarding eligible long-term care premiums includible in the term “medical care” for 2015 are $380 (attained age of 40 or less before close of tax year), $710 (41-50), $1,430 (51-60), $3,800 (61-70) and $4,750 (over 70).
Archer MSA limits rise. For Archer Medical Savings Accounts (MSAs), the term “high deductible health plan” means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,200 and not more than $3,300, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,450. For family coverage, the term “high deductible health plan” means, a health plan that has an annual deductible that is not less than $4,450 and not more than $6,650, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,150.
Small Business Tax Credit rises. The Patient Protection and Affordable Care Act’s Small Business Tax Credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,300 in 2014.
HSAs/HDHPs. In April 2014, the IRS released the 2015 cost-of-living adjustments affecting HSAs and HDHPs. Please see our Update for information on the 2015 HSA and HDHP limits.
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