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November 9, 2010

2011 limits applicable to MSAs, LTC premium, adoption assistance programs and Social Security

In Revenue Procedure 2010-40, the IRS released 2011 limits relating to MSAs, LTC premium, adoption assistance programs, and Social Security wage base.  Following are amounts applicable to tax years beginning in 2011.  Please note that the 2011 annual limits applicable to health savings accounts were released earlier this year (see No Change in Cost of Living Adjustments for HSAs,Benefit Beat, 6/7/10).

Archer Medical Savings Accounts

The Archer 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 2011 are:

 

2010

2011

Single

Family

Single

Family

HDHP Annual Deductible

Between $2,000 and $3,000

Between $4,050 and $6,050

Between $2,050 and $3,050

Between $4,100 and $6,150

Out-of-Pocket Expenses

$4,050

$7,400

$4,100

$7,500

Long-Term Care Premiums

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

Age at end of tax year

2010 Premium Limit

2011 Premium Limit

<40

$ 330

$340

>40 but <50

$ 620

$640

>50 but <60

$ 1,230

$1,270

>60 but <70

$ 3,290

$3,390

>70

$ 4,110

$4,240

Adoption Assistance Programs 

For purposes of adoption assistance programs (IRC §137), the exclusion limit and AGI phase-out limits for 2011 are:

 

2010

2011

Exclusion Limit

$12,170

$13,360

AGI Phase-out Limits

Between $182,520 and $222,520

Between $185,210 and $222,210

2011 Social Security COLAs

There are no cost of living adjustments to the Social Security wage base for 2011; 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 2011 Social Security Cost-of-Living Adjustments.

 

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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