Employee Benefits Compliance, Taxes, Fees & Penalties

2019 COLAs for Benefit Plans

cost of living

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.

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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)
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$1,000No change
High Deductible Health Plan (HDHP): 

IRC § 223(c)(2)(A)

2018   2019   Change
Minimum Annual Deductible – Individual Coverage$1,350$1,350No change
Minimum Annual Deductible – Family Coverage$2,700$2,700No 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  2019Change
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 Amounts20182019   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




+ $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


+ $270
Affordability Percentage for Employer Shared Responsibility9.56%9.86%+ 0.3%
Federal Poverty Line safe harbor Amount$96.72$99.75+ $3.03
Federal Poverty Line – household size of one$12,140Issued in January 2019Not yet known
High Compensation Thresholds 20182019   Change
Highly Compensated Employee (HCE) Threshold

–  IRC §414(q)(1)(B)

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)20182019Change
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 Security20182019Change
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)20182019Change
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$5,000No change
DCAP if employee is married but filing a separate return from spouse$2,500$2,500No change
401(k), 403(b), Profit-Sharing Plans:20182019   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$ 6,000No 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):         20182019Change
IRA Contribution Limit$5,500$6,000+$500
IRA Catch-up Contributions (age 50 and older)$1,000$1,000No change

Guidance on 2019 Cost-of-Living-Adjustments: