The Internal Revenue Service has released Revenue Procedure 2016-55 which contains the 2017 cost-of-living adjustments for various employee benefit plans including employer sponsored health care flexible spending accounts, qualified transportation fringe benefits, and adoption assistance programs. The following provides a summary of the annual limits for these specific benefit programs with full details on all the announced tax changes available within the IRS news release.

Also included within this alert is a summary of the 2017 high deductible health plan and health savings accounts limits announced earlier this year.

If you have any questions or need further details about the tax limits and how they will impact your employee benefit programs please contact your Trion account team.

Health Care Flexible Spending Accounts
For taxable years beginning in 2017 the dollar limit on employee contributions to an employer sponsored health care flexible spending account plan has increased. Employees will now be allowed to contribute up to $2,600 per plan year.

Qualified Transportation Fringe Benefit
For tax years beginning in 2017, the monthly dollar limit on employee contributions will remain at $255 per month for the value of transportation benefits provided to an employee for qualified parking. The 2017 combined transit pass and vanpooling expense limit will also remain at $255 per month.

Adoption Credit/Adoption Assistance Programs
In the case of an adoption of a child with special needs, the maximum credit allowed under Code Section 23 is increased to $13,570. The income threshold at which the credit begins to phase out is increased to $203,540. Similarly, the maximum amount that an employer can exclude under Code Section 137 from an employee’s income for adoption assistance benefits is increased to $13,570.

HDHP and Health Savings Account (HSA) Amounts
Earlier this year the IRS released Revenue Procedure 2016-28 which included the 2017 minimum deductible and maximum out-of-pocket limits for high deductible health plans (HDHPs) and the maximum contribution levels for HSAs. Effective for calendar year 2017:

• The minimum annual deductible for a plan to qualify as an HDHP will remain at $1,300 for self-only coverage and $2,600 for family coverage;
• The maximum annual out-of-pocket limits allowable under an HDHP will remain at $6,550 for self-only coverage and $13,100 for family coverage; and
• The 2017 maximum allowable annual contribution employees may make to their HSAs will increase to $3,450 for an individual with self-only coverage and remain at $6,750 for an individual with family coverage.

The 2017 HSA catch-up contribution limit for participants who are 55 or older on December 31, 2017, remains at an additional $1,000 per year.

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