IRS Issues 2014 Adjusted Limits For Transportation, Long Term Care, Adoption Assistance, MSAs

In Rev. Proc. 2013-35, the Internal Revenue Service provides a variety of inflation-adjusted figures for 2014, including figures for transportation fringe benefits, long term care, medical savings accounts (MSAs), and adoption assistance and tax credit limits.

Transportation. For taxable years beginning in 2014, the monthly limitation under IRC Sec.132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, is $130. The monthly limitation under Sec 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is $250 ($245 in 2013).

Long term care. For tax years beginning in 2014, the limits under IRC Sec. 213(d)(10) for eligible long term care premiums deductible as “medical care,” based on the insured’s age before the close of the taxable year, are as follows:

• for those age 40 or younger, the limit is $370 ($360 in 2013);

• for those older than age 40 but not older than age 50, the limit is $700 ($680);

• for those older than age 50 but not older than age 60, the limit is $1,400 ($1,360);

• for those older than age 60 but not older than age 70, the limit is $3,720 ($3,640); and

• for those older than age 70, the limit is $4,660 ($4,370).

In addition, for 2014, the per-day limit applicable to aggregate payments for per diem-type long term care insurance contracts and amounts received by a chronically ill individual under a life insurance contract under IRC Sec. 7702B(d)(4) is $330 (up from $310).

Adoption assistance. For 2014, the maximum aggregate amount per child that an employer can provide an employee for adoption assistance under IRC Sec. 137(a)(2) or that an employee can claim for an adoption tax credit is $13,190. The available adoption limit begins to phase out for employees with a modified adjusted gross income in excess of $197,880 and phases out entirely for employees with modified adjusted gross income of $237,880.

MSAs. For self-only coverage in 2014, a high-deductible health plan (HDHP) is defined in IRC Sec. 220(c)(2)(A) as a plan that has an annual deductible that is not less than $2,200 and not more than $3,250 (up from $2,150 and $3,200 in 2013) and annual out-of-pocket expenses that do not exceed $4,350 (up from $4,300). For family coverage in 2014, an HDHP has an annual deductible that is not less than $4,350 and not more than $6,550 (up from $4,300 and $6,450 in 2013) and annual out-of-pocket expenses that do not exceed $8,000 (up from $7,850).

Rev. Proc. 2014-35 is available at http://www.irs.gov/pub/irs-drop/rp-13-35.pdf. For more information, contact William Ruane at (202) 622-4920.

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