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November 14, 2011

2012 limits applicable to MSAs, LTC premium, adoption assistance programs and qualified transportation expenses

In Revenue Procedure 2011-52, the IRS released 2012 limits relating to MSAs, LTC premium, adoption assistance programs.  Following are amounts applicable to tax years beginning in 2012.  Please note that the 2012 annual limits applicable to health savings accounts were released earlier this year (see Health Savings Accounts:  2012 Cost of Living Adjustments, Benefit Beat, 6/7/11).

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 2012 are:

 

2012

2011

Single

Family

Single

Family

HDHP Annual Deductible

Between $2,100 and $3,150

Between $4,200 and $6,300

Between $2,050 and $3,050

Between $4,100 and $6,150

Out-of-Pocket Expenses

 $4,200

 $7,650

 $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

2012 Premium Limit

2011 Premium Limit

<40

$ 350

$340

>40 but <50

$ 660

$640

>50 but <60

$ 1,310

$1,270

>60 but <70

$ 3,500

$3,390

>70

$ 4,370

$4,240

Adoption Assistance Programs 

For purposes of adoption assistance programs (IRC §137), the exclusion limit and AGI phase-out limits for 2012 are:

 

2012

2011

Exclusion Limit

$12,650

$13,360

AGI Phase-out Limits 

Between $189,710 and $229,710

Between $185,210 and $222,210

Qualified Transportation Expenses

The transportation expenses reimbursed by an employer, and excludable from an employee’s income, under a qualified IRC §132(f) transportation program per month in 2012 are:

 

2012

2011

Commuter Highway Vehicle (van pooling) and Any Transit Pass

 $125*

 $230

Qualified Parking

$240

$230

* The American Recovery and Reinvestment Act of 2009 temporarily increased the qualified transportation benefit (van pooling and transit passes) to match the qualified parking benefit for the 2/17/09 through 12/31/10 period.   The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 further extended the increase for the 1/1/11 through 12/31/11 period.   Thus, this temporary extension expires at the end of 2011, unless Congress acts to change the law.  If Congress does not act to change the law, then the van pooling and transit pass limits will revert to $125 (as adjusted by the cost of living changes, effective January 1, 2012).  At this time, there doesn’t appear to be any pending federal legislation to further extend the increased limit. 

Qualified Bicycle Fringe Benefit. The limit for reimbursement of qualified bicycle expenses is not tied to a cost of living adjustment; thus, the $240 annual limit remains the same for 2012.

 

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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