Pension & Benefits News IRS issues 2020 adjusted limits for various benefits
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Monday, November 11, 2019

IRS issues 2020 adjusted limits for various benefits

By Pension and Benefits Editorial Staff

In Rev. Proc. 2019-44, the Internal Revenue Service provides a variety of inflation-adjusted figures for 2020, including figures for cafeteria plans, long-term care, medical savings accounts (MSAs) and transportation fringe benefits.

Cafeteria plans. For the taxable year beginning in 2020, the dollar limitation under Code Sec. 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is up from 2019, from $2,700 to $2,750.

Long-term care. For taxable years beginning in 2020, the limits under Code Sec. 213(d)(10) for eligible long-term care premiums deductible as “medical care,” based on the insured’s age before the close of the taxable year, are as follows:

  • for those age 40 or younger, the limit is $430 (up from $420 in 2019);
  • for those older than age 40 but not older than age 50, the limit is $810 ($790 in 2019);
  • for those older than age 50 but not older than age 60, the limit is $1,630 ($1,580);
  • for those older than age 60 but not older than age 70, the limit is $4,350 ($4,220); and
  • for those older than age 70, the limit is $5,430 ($5,270).

In addition, for calendar year 2020, the per-day limit applicable to aggregate payments for per diem-type long-term care insurance contracts and amounts received by a chronically ill individual under a life insurance contract under Code Sec. 7702B(d)(4) is $380 ($370 in 2019).

MSAs. For self-only coverage in 2020, a high-deductible health plan (HDHP) is defined in Code Sec. 220(c)(2)(A) as a plan that has an annual deductible that is not less than $2,350 and not more than $3,550 ($2,350 and $3,500 in 2019) and annual out-of-pocket expenses that do not exceed $4,750 (up from $4,650 in 2019). For family coverage in 2020, an HDHP has an annual deductible that is not less than $4,750 and not more than $7,100 (up from $4,650 and $7,000 in 2019) and annual out-of-pocket expenses that do not exceed $8,650 (up from $8,550 in 2019).

Transportation. For the taxable year beginning in 2020, the monthly limitation under Code Sec. 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, is $270 up from $265 in 2019. The monthly limitation under Code Sec. 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is also $270, up from $265 in 2019.

QSEHRA. For tax years beginning in 2020, in order to qualify as a small employer health reimbursement arrangement (QSEHRA) under Code Sec. 9831(d), the total amount of payments and reimbursements for any year cannot exceed $5,250 ($10,600 for family coverage).

SOURCE: Rev. Proc. 2019-44, I.R.B. 2019-47, November 18, 2019.

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