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IRS Releases 2016 Cost of Living Adjustments for Health FSAs, DCAPs, Transportation Benefits & Adoption Credits

The IRS released the 2016 cost of living adjustments for tax-related limits to salary reductions for a variety of benefits. These adjustments are summarized in the table below.

Benefit2015 Limit2016 Limit
Qualified Transportation Fringe Benefit $250/month $255/month (increased by $5)
Adoption Credit $13,400 $13,460 (increased by $60.00)

 

The benefits below remain unchanged in 2016:

Benefit2015 Limit2016 Limit
Health FSA $2,550 $2,550
DCAP $5,000/$2,500 $5,000/$2,500
Transit Passes and Vanpooling $130/month $255/month

 

To whom does this apply?
This cost of living adjustment applies to employers who offer transportation and adoption benefits.
 
What steps must employers take to comply?
Increasing the dollar limits to match the increased maximums is optional.
 
When do employers need to comply?
These rates are applicable to the 2016 tax year.

 

If you have any questions, please contact your Client Solutions  team.

 

Compliance Quarterly is being provided as an informational tool. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this publication and any attachments, Meritain Health is not exercising discretionary authority over the plan and is not assuming a plan fiduciary role, nor is Meritain Health providing legal advice.