Each year in the fall, the IRS announces new limits for several types of benefits that have maximums subject to annual indexing. You can find the full list of the recently released amounts for 2023 in IRS Revenue Procedure 2022-38, but we’ve outlined the most common items employers ask us about.
Health Flexible Spending Account (FSA)
For plan years beginning in 2023, the salary reduction contribution limit is $3,050. For health FSAs that include a carryover feature, the maximum carryover is $610.
Qualified Commuter Plans—Mass Transit and Parking
For 2023, the monthly limits are increased to $300 for both qualified parking and mass transit.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
For 2023, QSEHRAs may not reimburse more than $5,850 per year for single coverage and $11,800 for family coverage.
Adoption Assistance Programs
For 2023, the maximum tax credit and employer-provided adoption assistance that can be excluded from wages is increased to $15,960. Individuals with a modified adjusted gross income above $239,230 may not take the full exclusion amount.
The dependent care FSA contribution maximum is not subject to annual indexing and remains $5,000 (or $2,500 each if the employee and spouse file separate income tax returns) for calendar year 2023.
The limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) are traditionally released earlier in the year. The limits vary based on whether an individual has self-only or family coverage under an HDHP; the 2023 limits are as follows:
|Annual HSA Contribution Limit|
Self Only: $3,850
Catch-up: $1,000 (age 55 or older)
|Minimum Annual HDHP Deductible|
Self- only: $1,500
|Maximum HDHP Out of Pocket|
If the HDHP is a non grandfathered plan, a cost-sharing limit of $9,100 for self-only coverage or $18,200 for family coverage will apply to Affordable Care Act (ACA) essential health benefits. These limits were announced at the end of 2021 and represent an increase of $400 and $800, respectively, over 2022 limits.