Benefit Limits for 2022

Each year, the IRS sets new limits for employee benefits plans and retirement plans. Please see below for Lake Effect’s ready reference chart setting forth the Benefits Limits for the 2022 tax year. A PDF of this information can be downloaded here.

 

2021 2022
Flexible Spending Accounts (FSAs)
Healthcare FSA max election (per year) (incl. LTD FSA) $2,750 $2,850
Healthcare FSA max rollover $550 $570
Dependent Care FSA max election (per year) (Single or Married Filing Jointly) $5,000 $5,000*
Dependent Care FSA max election (per year) (Married Filing Separately) $2,500 $2,500*
Transportation Benefits
Parking Account $270/mo $280/mo
Transit Account $270/mo $280/mo
High Deductible Health Plan Requirements to Contribute to an HSA
HDHP min annual deductible - Self-only $1,400 $1,400
HDHP min annual deductible - Family $2,800 $2,800
HDHP out-of-pocket max - Self-only $7,000 $7,050
HDHP out-of-pocket max - Family $14,000 $14,100
HSA max contribution limit - Self-only $3,600 $3,650
HSA max contribution limit - Family $7,200 $7,300
HSA catch up contribution limit (age 55) $1,000 $1,000
ACA Plan Limits
Maximum Out-of-Pocket (Self-only or Individual in a Family) $8,550 $8,700
Maximum Out-of-Pocket (Family) $17,100 $17,400
Salary Thresholds for Non-discrimination Testing
Highly compensated employees $130,000 $135,000
Key employees $185,000 $200,000
Retirement Plans (401(k), 403(b))
Max employee elective contributions for those 49 and younger $19,500 $20,500
Max employer + employee contributions for those 49 and younger $58,000 $61,000
Max employee catch-up contributions for those 50+ $6,500 $6,500
Max employee elective contribution plus catch-up for those 50+ $26,000 $27,000
Max employer + employee contributions for those 50+ $64,500 $67,500

*As of the time of drafting this blog, the dependent care limits for 2022 reverted to the pre-ARPA levels

Lake Effect is here to answer your questions about benefits administration and how best to structure your benefits plans to be a leading employer. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

IRS Increases Flexibility for Employer Health Plans, FSAs and Dependent Care Programs

On May 13, 2020, the IRS released new guidance giving employers greater flexibility in the administration of sponsored Sec. 125 cafeteria plans (including health insurance, flexible spending and dependent care plans), whether insured or self-insured. Under the new rules, an employer may amend plan documents to permit employees to make new health care elections or change current elections mid-year on a prospective basis (outside of the customary open enrollment period). An employer may also give employees more time to apply unused medical flexible spending and dependent care account dollars, recognizing that cancellation of medical procedures and school/day care closures during the pandemic have dramatically affected employee balances in these accounts.

Under the new guidance, employers may permit eligible employees covered by a Sec. 125 cafeteria plan to do the following:

  • Employer Sponsored Health Plans:
    • Allow employees to enroll in health care insurance plan on a prospective basis, even if the employee initially declined to elect coverage under the employer-sponsored health coverage.
    • Revoke an existing election and make a new election to enroll in different coverage sponsored by the same employer on a prospective basis.
    • Revoke an existing election, provided that the employee attests in writing that they are enrolled, or will immediately enroll, in other health coverage not sponsored by the employer. (The guidance provides a sample attestation.)
  • Medical Flexible Spending Plans and Dependent Care Spending Plans:
    • Revoke an election, make a new election, or decrease or increase an existing election applicable to a health flexible savings account or dependent care assistance program. (Employers can limit the election changes to be no less than amounts already reimbursed to the employee.)
    • Revise their plans to provide options for employees who have unused amounts at the end of the 2020 calendar year in one of two ways:
      • Grace Period: Allows plan participants to incur expenses and use the remaining funds in the account no later than March 15, 2021.
      • Carry over: Allows plan participants to carry over amounts up to $550 into their plan for the 2021 year.
      • Note: An employer would need to choose either the Grace Period or the Carry Over option, they cannot do both.

Keep in mind that the increased flexibility allowed by the new IRS guidance is optional, not required. To implement any of the above changes, an employer must adopt amendment(s) to applicable Sec. 125 cafeteria plans on or before December 31, 2021, and those amendments may be effective retroactively to January 1, 2020. The employer must also inform all eligible employees of any changes to the Sec. 125 cafeteria plans. Employers should work closely with their benefits brokers and health plan providers to make any of these changes.

The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to help. Contact us at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect HR & Law, LLC
(844) 333-5253 (LAKE)
info@le-hrlaw.com

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