IRS issues 2017 adjusted limits for various benefits

In Rev. Proc. 2016-55, the Internal Revenue Service provides a variety of inflation-adjusted figures for 2017, including figures for cafeteria plans, long-term care, medical savings accounts (MSAs) and transportation fringe benefits.

Cafeteria plans. For the taxable year beginning in 2017, the dollar limitation under Code Sec. 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is up from 2016, from $2,550 to $2,600.

Long-term care. For tax years beginning in 2017, the limits under Code 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 $410 ($390 in 2016);
• for those older than age 40 but not older than age 50, the limit is $770 ($730);
• for those older than age 50 but not older than age 60, the limit is $1,530 ($1,460);
• for those older than age 60 but not older than age 70, the limit is $4,090 ($3,900); and
• for those older than age 70, the limit is $5,110 ($4,870).

In addition, for 2017, 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 Code Sec. 7702B(d)(4) is $360 (from $340 in 2016).

MSAs. For self-only coverage in 2017, a high-deductible health plan (HDHP) is defined in Code Sec. 220(c)(2)(A) as a plan that has an annual deductible that is not less than $2,250 and not more than $3,350 (unchanged from 2016) and annual out-of-pocket expenses that do not exceed $4,500 (from $4,450 in 2016). For family coverage in 2017, an HDHP has an annual deductible that is not less than $4,500 and not more than $6,750 (up from $4,450 and $6,700 in 2016) and annual out-of-pocket expenses that do not exceed $8,250 (up from $8,150 in 2016).

Transportation. For the taxable year beginning in 2017, the monthly limitation under Code Sec. 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, is $255, up from $130 in 2016. The monthly limitation under Code Sec. 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is also $255, unchanged from 2016.

SOURCE: Rev. Proc. 2016-55, IRB 2016-45, November 7, 2016.

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