2021 Health FSA and Other Limits Announced

At a Glance

• The 2021 limits for:
  • Health FSA, including a Limited Purpose Health FSA remains $2,750/yr
  • Health FSA maximum carryover of unused amounts will be $550
  • Qualified Transportation plans remains $270/mo
  • Qualified Parking plans remains $270/mo
  • Excepted Benefit HRA remains $1,800/yr
  • Qualified Small Employer HRA (QSEHRA) increases to $5,300/yr for single coverage and $10,700/yr for family coverage

Increases to Some but not All

IRS Revenue Procedure 2020-45 provides details about the annual inflation adjustments for more than 60 tax provisions, including contribution limits for Health FSAs and reimbursement limits for Qualified Transportation fringe benefit plans and Qualified Small Employer HRAs (QSEHRAs). The limits for Health FSA, qualified transportation, and parking will not change from the 2020 limits. However, the maximum annual reimbursement limit under a QSEHRA is increasing slightly to $5,300yr/single and $10,700yr/family.

Additionally, Revenue Procedure 2020-43 provides the inflation-adjusted maximum dollar amount that may be made available for Excepted Benefit Health Reimbursement Arrangements (EBHRAs) in 2021.

Health FSA, Transportation, QSEHRA and EBHRA Plan Limits 2021 v. 2020
Benefit Plan	2021	2020	Change
Health FSA	$2,750/year	$2,750/year	No change
Qualified Commuter and Transit Benefits	$270/month	$270/month	No change
Qualified Parking	$270/month	$270/month	No change
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)	$5,300/year for single coverage   $10,700/year for family coverage	$5,250/year for single coverage   $10,600/year for family coverage	+ $50   + $100
Excepted Benefit HRA (EBHRA)	$1,800/year	$1,800/year	No change

 

Next Steps

With open enrollment season upon us, employers should review their open enrollment materials for accuracy and communicate any updates.