Compliance Connection

IRS Annual Inflation Adjustments

Submitted by Tom Sledge, Arkansas State Manager, American Fidelity Assurance Co.

The Internal Revenue Service (IRS) announced annual inflation adjustments for many tax provisions. These increases are effective for plan years beginning 1/1/2022 and later.

Healthcare Flexible Spending Account (HCFSA) and Limited Purpose Flexible Spending Account (LPFSA):

2021: $2,750

2022: $2,850

HCFSA Carryover:

2021: $550

2022: $570

Under the Consolidated Appropriations Act (CAA), employers can allow participants to roll over all unused FSA and dependent care funds to plan years ending in 2022, but not beyond.

Dependent Care Account (DCA) annual limits will revert to $5,000 for single taxpayers and married couples filing jointly, or $2,500 for married people filing separately.

Health Savings Account (HSA):

As a reminder, below are the HSA contribution limits, along with the High Deductible Health Plan (HDHP) requirements announced earlier this year.

HSA Contribution

2021 Self-Only: $3,600

2021 Family: $7,200

2022 Self-Only: $3,650

2022 Family: $7,300

2022 Qualified High Deductible Health Plan

Minimum Deductible (Self-Only): $1,400

Minimum Deductible (Family): $2,800

Max Out-Of-Pocket (Self-Only): $7,050

Max Out-Of-Pocket (Family): $14,100

If you have any questions or need help communicating these changes to employees, we are here to help.