IRS Releases 2018 Inflation Adjustments to Tax Provisions


The Internal Revenue Service released the annual inflation adjustments that will apply to certain benefit plan tax provisions in 2018. Revenue Procedure 2017-58, which can be accessed by clicking here, identifies inflation-adjusted items for different provisions of the tax code. From an employee benefits standpoint, the following limits may be of interest to employers:

  • The dollar limit on voluntary employee salary reduction contributions to health flexible spending accounts is increased to $2,650 for plan years beginning in 2018.
  • The monthly exclusion amount for transportation and transit passes is increased to $260.
  • The monthly limit for the qualified parking exclusion is increased to $260.
  • The dollar amount used to determine the penalty for an individual who does not maintain minimum essential health coverage remains at $695.
  • For participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible of not less than $2,300 but not more than $3,450 (increased from 2017).  For self-only coverage, the maximum out of pocket expense amount is increased to $4,600. For family coverage, the annual deductible minimum is $4,600 and maximum is $6,850 (increased from 2017). The out of pocket expense limit for family coverage is increased to $8,400.
  • The dollar amount that may be claimed as an employee health insurance expense of small employers is increased to $26,700. This amount is used for limiting the small employer health insurance credit and for determining who is a small employer.
  • The maximum amount that can be excluded from an employee’s gross income for qualified adoption expenses furnished pursuant to an adoption assistance program is increased to $13,840.

As always please contact your Total Benefit Solutions account manager at (215)355-2121 if you have any questions or concerns.

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