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December 5, 2006

2007 Cost-of-Living Adjustments for HSAs, MSAs and Other Benefits

In Rev Proc 2006-53, the IRS released several cost of living adjustments for various benefits.  Following are amounts applicable to tax years beginning in 2007:

Health Savings Accounts

For 2007, the annual deductible amounts for a high deductible health plan (HDHP) used in conjunction with a health savings account (HSA), and limits for out-of-pocket expenses and contributions are:

 

Individual / Self-only

Family

HDHP Annual Deductible

$1,100

$2,200

Out-of-Pocket Expenses

$5,550

$11,000

 

Contribution Limits

Lesser of:

  • Annual deductible ($1,100+); or
  • $2,850

Lesser of:

  • Annual deductible ($2,200+); or
  • $5,650

The special additional contribution for individuals aged 55 or older increases from $700 to $800.

Archer Medical Savings Accounts

The annual deductible limit of a HDHP and out-of-pocket expense limit in an Archer medical savings account for 2007 are:

 

Single

Family

HDHP Annual Deductible

Between $1,900 and $2,850

Between $3,750 and $5,650

Out-of-Pocket Expenses

$3,750

$6,900

Transportation Benefits

Transportation expenses reimbursed by an employer under a qualified transportation program (IRC §132(f)) are:

 

2006

2007

Commuter Highway Vehicle and Any TransitPass

$105

$110

Qualified Parking

$205

$215

Long-Term Care Premiums

The IRS limitations relating to eligible long-term care premiums includible as medical care, as defined in IRC §213(d).

Age at end of tax year

Premium Limit

<40

$ 290

>40 but <50

$ 550

>50 but <60

$ 1,100

>60 but <70

$ 2,950

>70

$ 3,680

Adoption Assistance Programs 

For purposes of adoption assistance programs (IRC §137), the exclusion limit and AGI phase-out limits for 2007 are:

 

2006

2007

Exclusion Limit

$10,960

$11,390

AGI Phase-out Limits

Between $164,410 and $204,410

Between $170,820 and $210,820

 

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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