November 2, 2017

2018 Benefit Plan Limits (article)

In Revenue Procedure 2017-58, the IRS released 2018 inflationary or cost of living adjustments relating to several types of benefits, as follows (also see IRS News Release).

QSEHRA Payments and Reimbursements. A qualified small employer health reimbursement arrangement, known as a “QSEHRA”, allows eligible small employers (those employing fewer than 50 employees and who do not offer health coverage) to reimburse health insurance premium for individual coverage purchased either through or outside the marketplace.  Such arrangement must meet certain criteria, specifically, the QSEHRA:

  1. Must be funded solely by the eligible small employer; no salary reduction contributions can be made under this arrangement; and,
  2. Provides, following the employee’s proof of coverage, for the payment or reimbursement for medical care expenses, as defined in IRC Section 213(d)), including premium for health coverage through the individual market, incurred by the eligible employee or his/her family members. For 2017, the annual amount of payments and reimbursements is capped at $4,950 for employee-only, or $10,000 for arrangements that provide for payments or reimbursements for the employee’s family members.  Both of these limits are subject to inflationary adjustments. Accordingly, beginning in 2018, the total amount of payments and reimbursements is capped at $5,050 for employee-only; $10,250 for family coverage. 

As a reminder, the total amount of permitted benefits received under a QSEHRA must be reported in Box 12, using Code FF of the Form W-2.

Flexible Spending Account (FSA) Cap.  The amount that can be contributed to a health flexible spending account (FSA) through voluntary salary reductions for plan years beginning in 2018 will increase to $2,650, up from $2,600 in 2017.

Qualified Transportation Fringe BenefitsWith regard to transportation expenses reimbursed by an employer and excludable from the employee’s income under a qualified transportation program, the limits for 2018 slightly increase from 2017:




Commuter Highway Vehicle (van pooling) and

Any Transit Pass



Qualified Parking




As a reminder, if an employer sponsors a qualified bicycle fringe benefit plan, a participating employee who uses a bicycle for traveling between his/her home and place of employment would be entitled to receive a reimbursement of up to $20 per month ($240 annually) for qualified bicycle expenses.  This limit is not indexed nor tied to a cost of living adjustment.

Qualified Adoption Assistance Reimbursement Program (IRC §137)An employer-provided adoption assistance program that meets the qualifications of IRC §137, allows participants to recover expenses relating to adoption, such as reasonable adoption fees, court costs, attorney’s fees and traveling expenses.  Below are the exclusion limits and AGI phase-out limits for 2018 and 2017:




Exclusion Limit



AGI Phase-out Limits

Between $207,580 and $247,580

Between $203,540 and $243,540

Health Savings Accounts.  The 2018 annual limits applicable to health savings accounts were released earlier this year (see Health Savings Accounts: 2018 Inflation Adjustments, Benefit Beat, 5/8/17).

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 limits of a high deductible health plan used in conjunction with an Archer medical savings account for 2018 are slightly increased:








HDHP Annual Deductible

Between $2,300 and $3,450

Between $4,600 and $6,850

Between $2,250 and $3,350

Between $4,500 and $6,750

Out-of-Pocket Expenses






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

Age at end of tax year

2018 Premium Limit

2017 Premium Limit




>40 but <50



>50 but <60



>60 but <70







The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.   

Accelerated Recovery Resources

Access articles and tools to help your business generate cash, improve leverage, and align & transform as you recover from the pandemic.

COVID-19 Resources

Access all COVID-19 related articles to help your business respond to the pandemic.

Insights in Your Inbox