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November 5, 2009

2010 COLAs – Various Benefits, Social Security and Medicare

In Revenue Procedure 2009-50, the IRS released several cost of living adjustments for various benefits.  Following are amounts applicable to tax years beginning in 2010.

Please note that the 2010 annual limits applicable to health savings accounts were released earlier this year (seeHSA Limits for 2010 from the June 2009 Benefit Beat).

Archer Medical Savings Accounts

The MSA pilot project ended on December 31, 2007; therefore, no new MSAs could be established after that date.  For existing MSAs, the annual deductible limit of a HDHP and out-of-pocket expense limit in an Archer medical savings account for 2010 are:

 

2009

2010

Single

Family

Single

Family

HDHP Annual Deductible

Between $2,000 and $3,000

Between $4,000 and $6,050

Between $2,000 and $3,000

Between $4,050 and $6,050

Out-of-Pocket Expenses

$4,000

$7,350

$4,050

$7,400

Transportation Benefits

The American Recovery and Reinvestment Tax Act of 2009 (enacted 2/17/09), temporarily boosted the commuter highway vehicle and transit pass amounts to $230, beginning March 1, 2009 (see March ’09 Benefit Beat article, Qualified Transportation Subsidy.).  Unless extended by law, this provision expires on January 1, 2011.  The transportation expenses reimbursed by an employer under a qualified transportation program (IRC §132(f)) are:

 

2009

2010

Commuter Highway Vehicle and Any Transit Pass

$120

(Jan and Feb 2009 only)

$230 beginning 3/1/09

$230

Qualified Parking

$230

$230

Qualified Bicycle Fringe Benefit.  The limit for reimbursement of qualified bicycle expenses is not tied to a cost of living adjustment; thus, the $20 per month/$240 annual limit remains the same for 2010.

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

2009 Premium Limit

2010 Premium Limit

<40

$ 320

$330

>40 but <50

$ 600

$620

>50 but <60

$ 1,190

$1,230

>60 but <70

$ 3,180

$3,290

>70

$ 3,980

$4,110

Adoption Assistance Programs 

For purposes of adoption assistance programs (IRC §137), the exclusion limit and AGI phase-out limits for 2010 are:

 

2009

2010

Exclusion Limit

$12,150

$12,170

AGI Phase-out Limits

Between $182,180 and $222,180

Between $182,520 and $222,520

2010 Social Security COLAs

There are no cost of living adjustments to the Social Security wage base for 2010; thus, the wage base remains at $106,800.  The Medicare tax is generally assessed on all wages.  Currently, the combined tax rate is 7.65% (the Social Security portion is 6.2% on wages up to the applicable maximum taxable amount; the Medicare portion is 1.45% on all wages). SSA Fact Sheet of 2010 Social Security Cost-of-Living Adjustments.

2010 Medicare Parts A and B: Premium and Deductible Rates

2010

Part A

Premium

  • No monthly Part A premium for those with 40+ quarters of Medicare-covered employment.
  • $254.00 per month for those having 30-39 quarters of Medicare-covered employment.
  • $461.00 per month for people who are not otherwise eligible for premium-free hospital insurance and <30 quarters of Medicare-covered employment.

Deductible

$1,100

Part B Premium and Deductible

 

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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