November 10, 2023 – Yesterday the IRS announced the Health Care FSA and qualified transportation contribution limits for plan years beginning on or after January 1, 2024 in Revenue Procedure 2023-34.
2024 Health Care FSA and Transportation Contribution Limits
The 2024 Health Care FSA employee contribution limit is $3,200 (up $150 from the 2023 FSA annual limit). The maximum Health Care FSA carryover is indexed each year to 20% of the annual IRS maximum employee contribution limit. Therefore, for plan years beginning in 2024, the carryover maximum is $640 (or 20% of the 2024 FSA annual maximum of $3,200), which is an increase of $30 from the 2023 carryover limit of $610. As set by the Internal Revenue Code, the Dependent Care FSA limits for 2024 remain $5,000 for married filing jointly or single and $2,500 for married filing separately. The 2024 transportation benefit contribution limit is $315 per month (up $15 from the 2023 limits).
For Health Care FSA clients who currently allow the 2023 IRS maximum employee contribution of $3,050, we will automatically adjust your Health Care FSA plan to allow for employee contributions up to the 2024 IRS maximum of $3,200 for your 2024 plan year. Cafeteria Plan documents already accommodate this change and do not require an amendment. No changes will be made to your Health Care FSA plan if your current maximum election is less than $3,050.
Reminder Regarding 2024 Plan Maximums and Limits Previously Announced
The IRS also previously released the 2024 plan maximums and limits for health and welfare plans. Health Savings Account ("HSA") contribution maximums will increase in 2024 to $4,150 for self-only coverage and $8,300 for family coverage. In addition, the maximum out-of-pocket amounts will increase to $8,050 and $16,100 respectively and the minimum deductibles for HSA-qualifying health plans will increase to $1,600 and $3,200 respectively.
For employers subject to the ACA's Play-or-Pay mandate, the affordability safe harbor percentage applicable to 2024 plan years will be 8.39% (down from 9.12% in 2023). HHS out-of-pocket limits for ACA-compliant plans in 2024 will be $9,450 for self-only coverage and $18,900 for family coverage.