As we approach 2025, it’s essential for employers and employees alike to stay informed about the upcoming changes to various benefits programs. At Journey Payroll & HR, we want to ensure that you are well-prepared for these adjustments. Here’s a comprehensive overview of the key updates for medical flexible spending accounts (FSAs), commuter benefits, adoption assistance, and health reimbursement arrangements.
Medical FSA Contribution Limits
For 2025, the contribution limit for medical FSAs will increase to $3,300 per year, up from $3,200 in 2024. This $100 increase allows employees to set aside more pre-tax dollars for eligible medical expenses, providing greater financial flexibility.
Carryover Amounts
In addition to the contribution limit, the carryover amount for unused medical FSA funds will also rise. In 2025, employees can carry over $660 from their medical FSA, a $20 increase from the $640 limit in 2024. This feature helps employees avoid losing unspent funds at the end of the plan year.
Commuter Fringe Benefits Contribution Limits
For those utilizing commuter benefits, the monthly contribution limit will increase to $325 in 2025, up from $315 in 2024. This adjustment reflects the rising costs of public transportation and parking, allowing employees to save more on their commuting expenses.
Adoption Assistance Limits
The adoption assistance limit will see an increase as well. In 2025, the maximum amount that can be excluded from an employee’s gross income for adoption expenses will be $17,280, up from $16,810 in 2024. This amount applies to both general adoption expenses and those related to the adoption of special needs children.
Adoption Credit Phase-Out
It’s important to note that the adoption credit begins to phase out for taxpayers with a modified adjusted gross income exceeding $259,190 and is completely phased out for those earning $299,190 or more.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Limits
For small employers offering QSEHRAs, the contribution limits will also increase in 2025. The new limits will be $6,350 for self-only coverage and $12,800 for family coverage, compared to $6,150 and $12,450 in 2024, respectively. This increase allows small employers to provide more substantial health benefits to their employees.
Health Savings Account (HSA) Limits
Previously announced limits for HSAs will also take effect in 2025. The contribution limits will be $4,300 for individuals and $8,550 for families, up from $4,150 and $8,300 in 2024. 55 and older catch-up contribution $1,000.
High Deductible Health Plan (HDHP) Limits
For those enrolled in HDHPs, the minimum deductible will increase to $1,650 for self-only coverage and $3,300 for family coverage. The maximum out-of-pocket limits will also rise to $8,300 for self-only and $16,600 for family coverage.
Summary of Key Changes
- Medical FSA Contribution Limit: $3,300 (up from $3,200)
- Medical FSA Carryover: $660 (up from $640)
- Commuter Benefits Limit: $325/month (up from $315)
- Adoption Assistance Limit: $17,280 (up from $16,810)
- QSEHRA Limits: $6,350 (self-only), $12,800 (family)
- HSA Contribution Limits: $4,300 (self-only), $8,550 (family)
- HDHP Minimum Deductibles: $1,650 (self-only), $3,300 (family)
- HDHP Maximum Out-of-Pocket Limits: $8,300 (self-only), $16,600 (family)
These updates are crucial for planning your benefits strategy for the upcoming year. If you have any questions or need assistance in navigating these changes, feel free to reach out to us at Journey Payroll & HR. We’re here to help you make the most of your employee benefits!