2016 Inflation Adjustments

Some Benefits Increase Slightly; Others Are Unchanged

Yesterday, the Internal Revenue Service (IRS) announced annual inflation adjustments for the 2016 tax year. The items of greatest interest to most taxpayers include the following dollar amounts:

Refundable Credit for Coverage under a Qualified Health Plan                                    The limitation on tax imposed for excess advance credit payments is determined using the following table…

Household Income (expressed as a % of FPL) Limitation Amt.    (unmarried individuals) Limitation Amt.                 (all other taxpayers)
Less than 200% $300 $600
At least 200%,                  but less than 300% $750 $1,500
At least 300%,                  but less than 400% $1,275 $2,550

Employee Health Insurance Expense of Small Employers                                           Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,900.

Cafeteria Plans                                                                                                              The dollar limitation (under Sec. 125) on voluntary employee salary reductions for contributions to health FSAs remains at $2,550.

Qualified Transportation Fringe Benefits                                                                       The monthly limitation for the qualified transportation fringe benefit remains at $130 for transportation, but rises to $255 for qualified parking.

Medical Savings Accounts                                                                                        (Family coverage) The term “high deductible health plan” is defined as a plan that has an annual deductible that is not less than $4,450 and not more than $6,700, and under which annual out of pocket expenses do not exceed $8,150.

(Self-only coverage) The term “high deductible health plan” is defined as a plan that has an annual deductible that is not less than $2,250 and not more than $3,350, and under which annual out of pocket expenses do not exceed $4,450.

PCORI Fee                                                                                                                    The applicable dollar amount for plan and policy years ending on or after October 1, 2015 and before October 1, 2016 is $2.17.*

Click here to access the full text of Revenue Procedure 2015-53: https://www.irs.gov/pub/irs-drop/rp-15-53.pdf

*Source: IRS Notice 2015-60

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s