The IRS establishes many of the rates and limits that pertain to health plan compliance, including the affordability threshold and limits associated with flexible spending accounts (FSAs), health saving accounts (HSAs) and high deductible health plans (HDHPs). As a new year approaches plan sponsors need to know the latest numbers to stay compliant.
ACA affordability
The 2025 affordability threshold is 9.02%. This is a 0.63% increase from 2024’s 8.39% rate. Since the passage of the Affordable Care Act (ACA), employers with more than 50 full-time equivalent employees who sponsor group health plans have been required to provide employees “affordable” coverage. The IRS updates the threshold annually to account for rates of premium growth relative to income growth. The rate applies on a plan-year basis, meaning non-calendar plans are subject to 2024’s rate of 8.39% until their 2025 plan renewal. Employers who fail to provide affordable coverage can incur a shared responsibility penalty, and impacted employees may be eligible for a premium tax credit (PTC) through Healthcare.gov.
FSA limits
Participants in a health flexible spending account (FSA) can deduct $3,300 pre-tax from their paycheck in 2025 to pay for qualified health care expenses. For plans that allow a year-end rollover of unused FSA funds, the rollover amount in 2025 increased $20 to $660. The dependent care FSA contribution limit remains unchanged at $5,000.
HDHP plans
Employees will be able contribute up to $4,300 to their individual health savings account (HSA) in 2025. The limit for family HSAs will be $8,550. To be eligible for an HSA, policyholders must be enrolled in a high deductible health plan (HDHP), have no other health insurance, including Medicare, and cannot be claimed as a dependent on someone else's tax return. In 2025 HDHP deductibles must be at least $1,650 for individual coverage and $3,300 for family coverage. The out-of-pocket maximum for individual coverage will be $8,300 and $16,600 for family coverage.
Plan sponsors must remain vigilant in adhering to various regulations to maintain health plan compliance. To learn more about other employer obligations consider a compliance check. Bukaty Companies has the scope of knowledge businesses need to ensure employee benefits plans are in top shape.
