The Internal Revenue Service (IRS) released Revenue Procedure 2024-40 on October 22, 2024, outlining cost-of-living adjustments for health care flexible spending accounts (FSA), commuter, and adoption assistance program benefits for the 2025 taxable year.
The table below details the 2025 maximum limit amounts for these benefits (along with other plan limits announced earlier in the year detailed here), compared to the current 2024 limits.
Employers are advised to:
|
Health & Welfare Plan Limits |
2025 |
2024 |
Change from 2024 |
|
|
Health Care Flexible Spending Account (FSA) maximum contribution limit |
$3,300 |
$3,200 |
+$100 |
|
|
Health Care Flexible Spending Account (FSA) maximum carryover amount |
$660 |
$640 |
+$20 |
|
|
Health Savings Account (HSA) maximum contribution limit* * Includes both employee and employer contribution amount limits. |
Self-only coverage |
$4,300 |
$4,150 |
+$150 |
|
Family Coverage |
$8,550 |
$8,300 |
+ $250 |
|
|
Health Savings Account (HSA) catch-up contribution limit |
$1,000 |
$1,000 |
No change |
|
|
High-Deductible Health Plan (HDHP) minimum deductible |
Self-only coverage |
$1,650 |
$1,600 |
+$50 |
|
Family coverage |
$3,300 |
$3,200 |
+$100 |
|
|
High-Deductible Health Plan (HDHP) out-of-pocket maximum amount* * Including deductibles, copayments and other amounts, but excluding premiums. |
Self-only coverage |
$8,300 |
$8,050 |
+$250 |
|
Family coverage |
$16,600 |
$16,100 |
+$500 |
|
|
ACA Compliant Plans cost-sharing maximum limit* * The Affordable Care Act (ACA) requires health plans to place annual limits on participants’ cost-sharing for essential health benefits (EHBs). |
Self-only coverage |
$9,200 |
$9,450 |
-$250 |
|
Family coverage |
$18,400 |
$18,900 |
-$500 |
|
|
Excepted Benefit Health Reimbursement Arrangement (EBHRA) maximum amount *Employers offer EBHRAs to reimburse the cost of excepted benefits (such as limited-scope dental or vision coverage) as well as short-term, limited-duration insurance plan premiums. |
$2,150 |
$2,100 |
+$50 |
|
|
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) maximum amount |
Self-only coverage |
$6,350 |
$6,150 |
+$200 |
|
Family Coverage |
$12,800 |
$12,450 |
+$350 |
|
|
Commuter Benefit Limit |
2025 |
2024 |
Change from 2024 |
|
|
Qualified transit and parking maximum monthly contribution limit[1] |
$325 |
$315 |
+$10 |
|
|
Adoption Assistance Program Limit |
2025 |
2024 |
Change from 2024 |
|
|
Adoption assistance program[2] maximum contribution limit (including benefits provided for special needs children) |
$17,280[3] |
$16,810 |
+$470 |
|
Please reach out to your Risk Strategies account team with any questions or contact us directly at benefits@risk-strategies.com.
[1] Internal Revenue Code (Code) Section 132(f) permits employers to offer a qualified transportation benefit program to their employees on a tax-free basis through a compensation reduction agreement.
[2] Under Code §137, amounts paid by an employer (subject to dollar limits and other requirements) for “qualified adoption expenses” incurred in connection with the adoption (or in certain cases, the attempted adoption) of a child are excludable from an employee's gross income if furnished pursuant to an “adoption assistance program” of the employer.
[3] For 2025, the amount excludable from an employee's gross income begins to phase out under IRC Section 137(b)(2)(A) for taxpayers with modified adjusted gross income of more than $259,190 and is completely phased out for taxpayers with modified adjusted gross income of $299,190 or more.