As we step into the new year, the IRS has unveiled the much-anticipated cost of living adjustments for 2024 under various provisions of the Internal Revenue Code. These adjustments bring changes that may impact your employee benefit plans. Let’s delve into some key areas affected by these adjustments.
Cafeteria Plans – Health Flexible Spending Arrangements: For plan years beginning in 2024, the annual contribution limitation under Code Section 125(i) for voluntary employee salary reductions to health flexible spending arrangements (health FSAs) has increased to $3,200 from $3,050. Additionally, for plans allowing the carryover option, the maximum unused amount from a health FSA plan year that begins in 2024 and can be carried over to the following year is now $640.
Qualified Transportation Fringe Benefits: For the calendar year 2024, the monthly exclusion limitation for transportation in a commuter highway vehicle and any transit pass, as well as the monthly exclusion limitation for qualified parking expenses, has increased to $315 from $300.
Highly Compensated and Key Employee Thresholds: The compensation threshold for highly compensated employees/participants under Code Section 414(q)(1)(B) has risen to $155,000 for 2024. Similarly, the dollar limitation for defining a key employee under Code Section 416(i)(1)(A)(i) is now $220,000.
Non-Grandfathered Plan Out-of-Pocket Cost-Sharing Limits: For non-grandfathered group health plans, the 2024 maximum annual out-of-pocket limits are $9,450 for self-only coverage and $18,900 for family coverage.
If you’re interested in exploring further details, you can download the PDF with the complete information from the IRS website.
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