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Employee Benefits Plans – 2015 Inflation Adjustments

Following recent announcements by both the IRS and the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2015.  The key dollar amounts for retirement plans and individual retirement accounts (“IRAs”) are shown on the front side of this card.

The card’s reverse side shows a number of dollar amounts that employers will need to know in order to administer health flexible spending accounts (“FSAs”), health savings accounts (“HSAs”), high-deductible health plans (“HDHPs”), and health plans that are not grandfathered under the Affordable Care Act.

Many of the new numbers are slightly higher than their 2014 counterparts.  For instance, the annual 401(k), 403(b), or 457(b) deferral limit will increase from $17,500 to $18,000; the annual retirement plan catch-up contribution limit will increase from $5,500 to $6,000; the Section 415 limit on annual additions to a participant’s account will go from $52,000 to $53,000; and the annual compensation limit will increase from $260,000 to $265,000.

The annual compensation threshold used in identifying highly compensated employees (“HCEs”) will increase from $115,000 to $120,000 for 2015.  In identifying HCEs for 2015, however, employers should consider employees who earned at least $115,000 during 2014 (as well as 5% owners during either 2014 or 2015).

The annual limit on IRA contributions (whether traditional or Roth) will remain at $5,500, and the annual limit on IRA catch-up contributions will remain at $1,000.  The Social Security taxable wage base (important for retirement plans that are “integrated” with Social Security) will increase for 2015, from $117,000 to $118,500.

The maximum contribution to an HSA will increase slightly – from $3,300 to $3,350 for individual coverage, and from $6,550 to $6,650 for family coverage – while the maximum HSA catch-up contribution will remain at $1,000.

The minimum deductible for any HDHP (which must accompany any HSA) will also increase slightly – from $1,250 to $1,300 for individual coverage, and from $2,500 to $2,600 for family coverage.  For 2015, the total annual HDHP out-of-pocket expenses (deductibles, co-payments, and other amounts – but not premiums) may not exceed $6,450 for self-only coverage or $12,900 for family coverage (up from $6,350 and $12,700, respectively).

The 2015 maximum out-of-pocket limits for “essential health benefits” provided under all non-grandfathered health plans will increase more significantly than the HDHP limits – from $6,350 to $6,600 for individual coverage, and from $12,700 to $13,200 for family coverage.  This is because (as explained in our May 2014 article) the out-of-pocket limits for essential health benefits are adjusted using the “premium adjustment percentage” calculated by the Department of Health and Human Services, whereas the maximum HDHP out-of-pocket expense is adjusted on the basis of the Consumer Price Index.

Although the IRS has not yet announced the 2015 limit on employee deferrals to health FSAs, we expect the limit to increase from $2,500 to $2,550.  This $2,550 limit applies only to salary reduction contributions under a health FSA and not to employer contributions.  For this purpose, however, any employer FSA contributions that could have been received in cash are treated as salary reduction contributions.

A laminated version of our 2015 limits card is available upon request.  To obtain one or more copies, just ask any member of our Employee Benefits Group.  Or contact the Spencer Fane Marketing Department at either 816-474-8100 or marketing@spencerfane.com.