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The IRS announced 2021 limits for HSA’s and high-deductible health plans. Increases are in line and similar to prior year increases, despite the effect of COVID-19. Plan sponsors should update payroll and plan administration systems for the 2021 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, such as open enrollment and communication materials, plan documents, and summary plan descriptions. Employers should consider the new limits when planning for the upcoming benefit plan year and review plan communications to ensure that the appropriate limits are reflected. While the increases are modest, they are an additional opportunity for Americans to prepare and pay for their health care needs. More information can be found here.

For 2021, the dollar limit for employee contributions to health Flexible Spending Accounts (health FSA’s), made pre-tax through salary reductions, remains unchanged at $2,750. While the IRS 2021 pre-tax maximum for employee health FSA contributions is $2,750, an employer may limit its employees to less than $2,750. If employers provide health care FSA contributions, this amount is in addition to the amount that employees can elect. Employees can elect up to the IRS limit and still receive the employer contribution in addition. Click here for complete information.

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