Many employee benefits are subject to annual dollar limits that are periodically updated for inflation by the IRS.
The IRS typically announces the dollar limits that will apply for the next calendar year well in advance of the beginning of that year. This gives employers time to update their plan designs and make sure their plan administration will be consistent with the new limits. Although some of the limits will increase for 2021, most of the limits remain the same.
Increased Limits
For plan years beginning on or after Jan. 1, 2021, the following limits have increased:
Health savings account contributions:
Single coverage—$3,600 (up $50)
Family coverage—$7,200 (up $100)
High deductible health plan (HDHP) out-of-pocket maximum limit:
Single coverage—$7,000 (up $100)
Family coverage—$14,000 (up $200)
Tax exclusion for adoption assistance benefits—$14,440 (up $140)
Unchanged Limits
Certain limits will not change for 2021, including the flexible spending account salary reduction contribution limit, HDHP minimum deductible, 401(k) contribution limit and transportation fringe benefits monthly limits.