2017 Inflation Adjustments

IRS Announces 2017 Inflation Adjustments

On Tuesday, October 25, 2016, the IRS released the annual inflation adjustments for 2017 in Revenue Procedure 2016-55. The new annual limit for plan years starting on or after January 1, 2017 are listed below:

    • Medical FSA – $2,600 ($50 increase)
    • Limited FSA – $2,600 ($50 increase)
    • Transit – $255 per month (same as 2016)
    • Parking – $255 per month (same as 2016)
    • Adoption Assistance – $13,570 ($110 increase)
    • HSA Contribution Limits. Individuals with self-only HDHP coverage is $3,400, and the limit for individuals with family HDHP coverage is $6,750.
    • HDHP Minimum Deductibles. The 2017 minimum annual deductible for self-only HDHP coverage is $1,300 and the minimum annual deductible for family HDHP coverage is $2,600.
    • HDHP Out-of-Pocket Maximums. The 2017 maximum limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) for self-only HDHP coverage is $6,550, and the limit for family HDHP coverage is $13,100.

The Medical and Limited FSA increase will be pro-rated for short plan years (plan years shorter than 12 months) and any carryover amount from participants’ previous plan years may be added to the limit. For instance, participants may elect $2,600 for the 2017 plan year and carry over a maximum of $500 from the previous plan year, making their total account value $3,100 for the 2017 plan year. In other words, the $500 carryover does not count against or affect the $2,600 salary reduction limit.