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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.

Human Resources - 11/16/2021

DOL and HSA Updates

Over the past several months, most businesses and organizations have been focused on the ever-changing landscape created by the COVID-19 pandemic. In the meantime, the Department of Labor (DOL) and other federal agencies have been busy implementing new and amended regulations affecting employers. Here are the recent HR and employment law updates you really need to know.

Retirement Plan Disclosures

Under a new DOL rule employers may post retirement plan disclosures online or deliver disclosures to plan participants by email. Before employers can initiate a new electronic delivery system, plan participants must be provided a paper notice informing them about the new electronic delivery, the email or web address that will be used, and the right to opt out if they prefer to continue receiving paper disclosures. Although the rule is not effective until July 27, DOL has announced that it will not take any enforcement action against a plan administrator that relies on this new rule before that date. This rule reflects the reality that many employees are still working remotely and confirms the necessity of utilizing virtual and electronic tools to deliver important information to your workforce

Updates for Non-Exempt Employees

The DOL has also enacted two new rules under the FLSA affecting non-exempt employees. First, the DOL confirmed that employers can pay bonuses, commissions, and other incentive payments to salaried, non-exempt employees who work and are paid by the fluctuating workweek method (i.e. their hours vary each week, but they are paid on a fixed salaried basis regardless of hours worked per week, with the exception of overtime hours which are paid an additional .5 x the employee’s regular rate). The intent of the rule change is to make it easier for employers to provide additional pay for salaried, non-exempt employees. The rule also clarifies that the additional pay must be included in the regular rate calculation to determine overtime pay for non-exempt employees working a fluctuating workweek.

The second new rule under the FLSA simplifies the overtime exemption for retail sales employees. Businesses that qualify as “retail or service establishments” may be able to exempt their commissioned employees from overtime pay. To qualify for this exemption, a business must have a “retail concept,” meaning that it typically sells goods or services to the general public, serves the general needs of the community, is at the very end of the stream of distribution, disposes its products and skills in small quantities, and is not a manufacturer. Several decades ago, the DOL developed a list of businesses that could qualify for the exemption and a list of businesses that would not. The new rule abolishes those lists. Going forward, no businesses will be automatically excluded. Rather, all businesses will be subject to the same qualifying test to determine if they constitute “retail or service establishments” and can therefore exempt their commissioned employees from FLSA overtime requirements.

Health Savings Account Updates

The IRS announced that health savings account (HSA) contribution limits for 2021 will be increased to $3,600 for individual coverage under a high-deductible health plan (an increase of $50) and $7,200 for family coverage (an increase of $100). The maximum annual deductibles to qualify as a high-deductible plan will not change from the current minimum annual deductible of $1,400 for individual coverage or $2,800 for family coverage. However, the maximum out-of-pocket amounts will increase to $7,000 for individual plans (up from $6,900) and $14,000 for family plans (up from $13,800).

As a reminder, the CARES Act expanded the scope of HSAs. Employees can now use their HSAs to pay for over-the-counter medications and menstrual care products.

Legal - 06/17/2020

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.

Human Resources - 05/14/2020