IRS and Social Security Administration each year announce the cost-of-living adjustments affecting tax and employee benefits dollar amounts for the upcoming calendar year. Some highlights for 2019 (& 2018) are listed below. Note that the annual cap on employee pre-tax contributions to a Health FSA (IRC §125) has increased $50, to $2,700; and the HCE threshold has increased $5,000 to $125,000.
This article was updated Nov. 19, 2018. The original post had several amounts “estimated” because we were still awaiting IRS Rev. Proc. The IRS has now issued Rev. Proc. 2018-57, and our “estimated” amounts were all correct. Amounts for 2019 IRC §4980H penalties are still shown as “estimated” because IRS has not yet released those for 2019.
FICA tax on employers (total of Social Security + Medicare tax)7.65%7.65%No changeFICA tax on employees (total of Social Security + Medicare tax)7.65%7.65%No change
| Health Savings Accounts (H.S.A.s): IRC § 223(b)(2)(A) | 2018 | 2019 | Change |
| Maximum Annual Contribution – Individual Coverage | $3,450 | $3,500 | + $50 |
| Maximum Annual Contribution – Family Coverage | $6,900 | $7,000 | + $100 |
| Catch-up Contribution – age 55 and over – IRC §223(b)(2)(A) | $1,000 | $1,000 | No change |
| High Deductible Health Plan (HDHP): IRC § 223(c)(2)(A) | 2018 | 2019 | Change |
| Minimum Annual Deductible – Individual Coverage | $1,350 | $1,350 | No change |
| Minimum Annual Deductible – Family Coverage | $2,700 | $2,700 | No change |
| Maximum Out-of-Pocket Expenses – Individual Coverage | $6,650 | $6,750 | + $100 |
| Maximum Out-of-Pocket Expenses – Family Coverage | $13,300 | $13,500 | + $200 |
| Non-HDHP Health Plans (Not H.S.A.-Compatible) | 2018 | 2019 | Change |
| Maximum Out-of-Pocket Expenses – Individual Coverage | $7,350 | $7,900 | +$550 |
| Maximum Out-of-Pocket Expenses – Family Coverage | $14,700 | $15,800 | +$1,100 |
| Affordable Care Act Amounts | 2018 | 2019 | Change |
| Annual 5000A(c) penalty for individual not having “minimum essential coverage” (MEC): greater of dollar amount or percentage of modified adjusted gross income (MAGI) | $695 or 2.5% of MAGI | $0 | Goes to zero |
| Annual 4980H(a) penalty for large employer not offering MEC to at least 95% of full-time employees. Multiply penalty amount by total number of full-time employees minus 30 | $2,320
| $2,500 (estimate) | + $180 |
| Annual 4980H(b) penalty for large employer not offering affordable minimum value coverage to all full-time employees. Penalty amount is per each full-time EE who qualifies for a subsidy to buy insurance in the marketplace. | $3,480 | $3,750 (estimate) | + $270 |
| Affordability Percentage for Employer Shared Responsibility | 9.56% | 9.86% | + 0.3% |
| Federal Poverty Line safe harbor Amount | $96.72 | $99.75 | + $3.03 |
| Federal Poverty Line – household size of one | $12,140 | Issued in January 2019 | Not yet known |
| High Compensation Thresholds | 2018 | 2019 | Change |
| Highly Compensated Employee (HCE) Threshold – IRC §414(q)(1)(B) | $120,000 | $125,000 | +$5,000 |
| Key Employee, Officer – IRC § 416(i)(1)(A)(i) | $175,000 | $180,000 | +$5,000 |
| Social Security Taxable Wage Base – § 2230 of Social Security Act | $128,400 | $132,900 | +$4,500 |
| Qualified Small Employer HRA (QSEHRA) | 2018 | 2019 | Change |
| Maximum reimbursement from a QSEHRA – Individual | $5,050 | $5,150 | +$100 |
| Maximum reimbursement from a QSEHRA – Family coverage | $10,250 | $10,450 | +$200 |
| Medicare & Social Security | 2018 | 2019 | Change |
| Medicare Part B, Standard Monthly Premium | $134.00 | $135.50 | +$1.50 |
| Medicare Part B, Annual Deductible | $183 | $185 | +$2.00 |
| Medicare Part D – average basic premium. (Part D sur-charges for most higher-income participants are also declining for 2019, amount varies based on income level) | $32.50 | $33.59 | +$1.09 |
| Health Flexible Spending Account (HFSA) Maximum Pre-Tax Contribution, & Dependent Care Assistance Plan (DCAP) | 2018 | 2019 | Change |
| HFSA, regardless of marital status (Rev. Proc. 2018-57) | $2,650 | $2,700 | +$50 |
| Maximum exclusion for qualified adoption expenses through an Adoptions Assistance Program | $13,840 | $14,080 | +$240 |
| Maximum monthly fringe benefit limit for transit & parking | $260 | $265 | +$5 |
| DCAP if employee is married and filing a joint return or is a single parent filing as “House of Household” – IRC § 129 | $5,000 | $5,000 | No change |
| DCAP if employee is married but filing a separate return from spouse | $2,500 | $2,500 | No change |
| 401(k), 403(b), Profit-Sharing Plans: | 2018 | 2019 | Change |
| Maximum Elective Deferrals (annually) – IRC § 402(g)(1) | $18,500 | $19,000 | +$500 |
| Catch-up Contributions (for those age 50 and older) | $ 6,000 | $ 6,000 | No change |
| Annual Compensation Limits – IRC § 401(a)(17) | $275,000 | $280,000 | +$5,000 |
| Annual Defined Contribution Plan Limits – IRC § 415(c)(1)(A) | $55,000 | $56,000 | +$1,000 |
| Individual Retirement Accounts (IRAs): | 2018 | 2019 | Change |
| IRA Contribution Limit | $5,500 | $6,000 | +$500 |
| IRA Catch-up Contributions (age 50 and older) | $1,000 | $1,000 | No change |
Guidance on 2019 Cost-of-Living-Adjustments:
- IRS Rev. Proc. 2018-57: §3.17 – $2,700 HFSA amount; §3.18 – $265 Transit amount; §3.20 – Adoption expenses; §3.62 – QSEHRA maximums.
- IRS Notice 2018-83: 2019 COLA increases for retirement plans and 401(k) plans.
- Medicare premiums: https://www.cms.gov/newsroom/fact-sheets/2019-medicare-parts-b-premiums-and-deductibles