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Compliance Briefing Center

Regulatory Updates

Making it Easier for You
to Manage Benefits

2022 Index Figures

 

November 11, 2021

 

 

The following general summary is intended to educate employers and plan sponsors on the potential effects of recent government guidance on employee benefit plans. This summary is not and should not be construed as legal or tax advice. The government’s guidance is complex and very fact specific. As always, we strongly encourage employers and plan sponsors to consult competent legal or benefits counsel for all guidance on how the actions apply in their circumstances.

On November 10, 2021, the Internal Revenue Service issued1 the 2022 annual inflation adjustments for many tax provisions of the IRS Code. These adjusted amounts will be used to prepare tax year 2022 returns in 2023. Also, on November 4, the IRS released2 the dollar limitations for qualified retirement plans for tax year 2022, including 401(k) plans.

Indexed Compensation Levels

For highly compensated and Key Employee definitions:

     2022 2021 2020 2019
Highly Compensated Employee $135,000 $130,000 $125,500
Key Employee $200,000 $185,000 $180,000

 

401(k), 403(b), or 457 Plans

     2022 2021 2020 2019
Maximum Employee Contribution $20,500 $19,500 $19,000
Maximum Catch-Up Allowed 50+ $6,500 $6,000

Health Flexible Spending Account (FSA)

     2022 2021 2020 2019
Annual Salary Reduction Limit $2,85 $2,750 $2,700

 

As a reminder, Healthcare FSAs that permit the carryover of unused amounts, the maximum carryover amount is increased to an amount equal to 20 percent of the maximum health FSA salary reduction contribution for that plan year. Accordingly, the maximum carryover amount from a plan year beginning in 2022 to be carried over to the immediately subsequent plan year beginning in 2023 is $570 (= $2,850 * 20%).3

Dependent Care Assistance Program (DCAP)

     2022 2021 2020 2019
Maximum DCAP Amount
Unless Married Filing Separately $5,000
If Married Filing Separately $2,500
Deemed Income of Spouse Incapable of Self-Care or Full-Time Student
With 1 Qualifying Individual $250/month
With 2 or More Qualifying Individuals $500/month

*While the $5,000/$2,500 DCAP limit has not changed, the maximum amount of DCFSA benefits permitted for income exclusion was temporarily increased to $10,500 (or $5,250 for married taxpayers filing separately) for the 2021 taxable year only4 and will return to $5,000/$2,500 for 2022 and subsequent years unless Congress acts.

There are adjustments to some of the general tax limits that are relevant to the federal income tax savings under a DCAP. These include the 2022 tax rate tables, earned income credit amounts, and standard deduction amounts. The child tax credit limits are also relevant when calculating the federal income tax savings from claiming the dependent care tax credit (DCTC) versus participating in a DCAP.

Commuter Accounts

     2022 2021 2020 2019
Parking – Monthly Limit $280 $270 $265
Transit and Vanpooling – Monthly Limit $280 $270 $265

 

Adoption Assistance Exclusion and Adoption Credit

     2022 2021 2020 2019
Phase Out (modified Adjusted Gross Income) $223,410 - $263,410 $216,660 - $256,660 $214,520 - $254,520 $211,160 – 251,160
Maximum Exclusion for EmployerProvided Adoption Assistance $14,890 $14,400 $14,300 $14,080
Adoption Tax Credit Limit $14,890 $14,400 $14,300 $14,080

 

Health Savings Account (HSA) 5

     20226 2021 2020 2019
Minimum deductible amounts for the qualifying high-deductible health plan (HDHP)
Individual Coverage $1,400 $1,350
Family Coverage $2,800 $2,700
Maximum Contribution Levels
Individual Coverage $3,650 $3,600 $3,550 $3,500
Family Coverage $7,300 $7,200 $7,100 $7,000
Catch-Up Allowed for Those 55+ $1,000
Maximums for HDHP Out-of-Pocket Expenses
Individual Coverage $7,050 $7,000 $6,900 $6,750
Family Coverage $14,100 $14,000 $13,800 $13,500

 

Excepted Benefit Health Reimbursement Arrangement (EBHRA)

     2022 2021 2020 2019
Maximum Newly Available Benefit Amount $1,800 N/A7

 

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

     2022 2021 2020 2019
Individual Coverage $5,450 $5,300 $5,250 $5,150
Family Coverage $11,050 $10,700 $10,600 $10,450

 

Archer Medical Savings Account (MSA)

     2022 2021 2020 2019
Minimum/Maximum Deductible Amounts for the Qualifying High-Deductible Health Plan (HDHP)
Individual Coverage $2,450 - $3,700 $2,400 - $3,600 $2,350 - $3,550 $2,350 - $3,500
Family Coverage $4,950 – 7,400 $4,800 - $7,150 $4,750 - $7,100 $4,650 - $7,000
Maximum Contribution Levels
Individual Coverage – 65% of Deductible Amount $2,405.00 $2,340.00 $2,307.50 $2,275.00
Family Coverage – 75% of Deductible Amount $5,550.00 $5,362.50 $5,325.00 $5,250.00
Maximums for HDHP Out-of-Pocket Expenses
Individual Coverage $4,950 $4,800 $4,750 $4,650
Family Coverage $9,050 $8,750 $8,650 $8,550

 

  1. https://www.irs.gov/pub/irs-drop/rp-21-45.pdf
  2. https://www.irs.gov/pub/irs-drop/n-20-79.pdf
  3. https://www.irs.gov/pub/irs-drop/n-20-23.pdf
  4. https://www.healthequity.com/doclib/compliance/Compliance_Alert_American_Rescue_Plan_Act_COBRA_Subsidy_Final_3.12.2021.pdf
  5. https://www.wageworks.com/employers/employer-resources/compliance-briefing-center/regulatory-updates/2021/2022-hsa-index-figures-and-irs-guidance-on-tax-treatment-of-dependent-care-benefits-available-under-extended-claims-periods-or-carryover/
  6. https://www.irs.gov/pub/irs-drop/rp-21-25.pdf
  7. EBHRAs are only available for plan years beginning on or after January 1, 2020