IRS Releases 2022 Welfare Benefit Plan Limits

The IRS has released Revenue Procedures 2021-25, and 2021-45 which set forth the 2022 inflation-adjusted limits for certain employee welfare benefit plans and the dollar amounts used for certain discrimination testing. 

Health FSAs. The 2022 limit for employee salary reduction contributions to health flexible spending accounts is $2,850 (a $100 increase from 2021). If a cafeteria plan permits the carryover of unused amounts, the maximum permitted carryover is $570 (a $20 increase from 2021). 

Dependent Care. After a temporary increase, the limit for dependent care flexible spending account contributions, and the maximum tax-exempt benefit from a dependent care assistance plan, reverts to $5,000 ($2,500 if married and filing separately).

Transportation and Parking. For 2022, the qualified transportation benefit limits are $280 per month for parking and $280 per month for transit, both limits up from $270 per month in 2021. 

Health Savings Accounts. For 2022, the HSA contribution limit for a self-only HSA is $3,650 (a $50 increase from calendar year 2021) and $7,300 for a family HSA (a $100 increase from calendar year 2021).

To qualify as a High Deductible Health Plan (“HDHP”) in 2022, a plan must have a minimum annual deductible of at least $1,400 for self-only coverage (no change), and $2,800 for family coverage (no change). The maximum out-of-pocket expense permitted for an HDHP is $7,050 for self-only coverage (a $50 increase) and $14,100 for family coverage (a $100 increase).

Highly Compensated Employee. “Highly compensated employees” must be determined for several welfare plan nondiscrimination tests. For the 2022 plan year, the IRS has previously announced that an employee who earns more than $135,000 in 2021 is an HCE (a $5,000 increase from 2021).

Revenue Procedure 2021-25 can be found at: https://www.irs.gov/pub/irs-drop/rp-21-25.pdf

Revenue Procedure 2021-45 can be found at: https://www.irs.gov/pub/irs-drop/rp-21-45.pdf