IRS Announces Inflation Adjustments for 2020

Yesterday, the Internal Revenue Service announced several tax code inflation adjustments for the 2020 tax year. Employers should note the new, upcoming limits for their welfare benefit plans.

  • Transportation Benefit. The monthly limit for qualified parking and the qualified transportation fringe benefit will be $270, up from $265 in 2019.
  • Health FSA. The dollar limit for employee salary reduction contributions to a health flexible spending account plan will be $2,750, up from $2,700 in 2019. This increased limit will apply to health flexible spending account plans with plan years beginning on or after 1/1/2020.
  • Medical Savings Accounts. Self-only coverage- The term “high deductible health plan” will mean, for self-only coverage, a health plan that has an annual deductible that is not less than $2,350 but not more than $3,550, which is an increase of $50 from tax year 2019. For self-only coverage, the maximum out-of-pocket expense that is required to be paid (other than for premiums) $4,750, an increase of $100 from 2019. Family coverage- The term “high deductible health plan” will mean, for family coverage, a health plan that has an annual deductible of not less $4,750 (up from $4,650 in 2019) and not more than $7,100 (up $100 from 2019). For family coverage, the out-of-pocket expense limit is $8,650, an increase of $100 from 2019.

A copy of the publication with all the adjustments, including the schedule of adjusted penalty amounts for failing to file IRS informational returns, may be accessed by clicking here.

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