IRS Increases Health FSA Contribution Limit for 2023, Adjusts Other Benefit Limits

The Internal Revenue Service (IRS) has released Revenue Procedure 2022-38, which increases the health flexible spending account (FSA) salary reduction contribution limit from 2022. The limit on annual employee contributions toward health FSAs for 2023 is $3,050, with the ability to carryover up to $610 to FSAs with plan years beginning in 2024.

The Revenue Procedure also contains the cost-of-living adjustments that apply to dollar limitations in certain sections of the Internal Revenue Code.


Qualified Commuter Parking and Mass Transit Pass Monthly Limit

For 2023, the monthly limits for qualified parking and mass transit are $300 each (which is a slight increase from 2022).

Adoption Assistance Tax Credit Increase

For 2023, the credit allowed for adoption of a child is $15,950 (up $1,060 from 2022). The credit begins to phase out for taxpayers with modified adjusted gross income in excess of $239,230 and is completely phased out for taxpayers with modified adjusted gross income of $279,230 or more.

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Increase

For 2022, reimbursements under a QSEHRA cannot exceed $5,850 (single) / $11,800 (family), an increase of $400 (single) / $750 (family) from 2022. 

Reminder: 2023 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

Earlier this year, the IRS announced the inflation adjusted amounts for HSAs and high deductible health plans (HDHPs). Those limits can be reviewed here.

About Michelle Cammayo

Michelle Cammayo has more than 13 years of Employee Benefits experience specializing in all lines of health and welfare benefits. Today, Michelle works closely with clients and partners to provide guidance in areas of the law including ERISA, HIPAA, COBRA, FMLA and PPACA. She also oversees the Compliance Department at Bolton & Company to ensure we are helping our clients manage and eliminate risk with regards to employee benefit compliance.

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