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2025 Contribution Limits – Updates

The IRS has announced the 2025 contribution limits for flexible spending accounts (FSA), commuter benefits, and more. Here’s a look at what’s changing:

  • Health FSA: $3,300 (Increased from $3,200).
  • FSA Rollover: $660 (Increased from $640).
  • Commuter (Parking and Transit): $325 per month (Increased from $315).
  • Dependent Care: The annual limits will remain $5,000 for single taxpayers and married couples filing jointly or $2,500 for married people filing separately.
  • Qualified Small Employer HRA: $6,350 for individuals and $12,800 for families.
  • HSA Limits (Announced Previously): $4,300 for individuals and $8,550 for families.
  • PCORI fee adjustment: 2025 Fee Not Yet Announced

IRS Contribution Limits (2024 Update)

Each year the IRS announces updates to contribution limits for Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), Health Reimbursement Arrangements (HRA), and other tax-advantaged accounts. Here’s a look at what’s changing:

LIMIT CATEGORY 2024 LIMITS 2023 LIMITS
Health FSA: Max Contribution Limit $3,200 $3,050
Health FSA: Rollover Max $640 $610
DCFSA: Max Contribution Limit $2500 / $5000 $2,500 / $5,000
HSA: Max Contribution Limit $4,150 Self-Only
$8,300 Family		 $3,850 Self-Only
$7,750 Family
HSA: Catch-Up Contribution Limit $1000 $1000
HSA: HDHP Out-of-Pocket Max $8,050 Self-Only
$16,100 Family		 $7,500 Self-Only
$15,000 Family
HSA: HDHP Minimum Annual Deductible $1,600 Self-Only
$3,200 Family		 $1,500 Self-Only
$3,000 Family
Commuter Reimbursement: Parking $315 $300/month
Commuter Reimbursement: Transit $315 $300/month

ACA Ruled Unconstitutional – Law Remains in Effect During Appeal

On Dec. 14, 2018, U.S. District Judge Reed O’Connor issued a ruling that determined the Affordable Care Act (ACA) is unconstitutional because of last year’s change to the federal tax law that zeroed out the ACA’s individual mandate penalty. The ruling was in favor of Texas and a number of states in Texas v. United States, which is the most recent in a series of judicial challenges to the ACA. The ruling is expected to be appealed, and the ACA remains in effect.

How did we get here? 
The U.S. Supreme Court has upheld the ACA as constitutional twice since the law was enacted. In the 2012 decision, the Supreme Court ruled that the individual mandate was a tax, which Congress has authority to impose, and therefore the ACA was constitutional.

The plaintiffs in the Texas v. United States litigation argued that when the mandate penalty was reduced to zero in the 2017 Tax Cuts and Jobs Act, the tax was effectively eliminated, so the individual mandate – and ACA as a whole – is unconstitutional. Judge O’Connor agreed that the mandate “can no longer be fairly read as an exercise of Congress’ tax power.” He further stated that because the mandate was essential to the law, it could not be severed (or separated) from the ACA, which means the entire ACA is invalid.

What the ruling means for the ACA today
The Texas v. United States ruling is not an injunction and does not block the operation of the law, so the ACA remains in effect. California is expected to appeal Judge O’Connor’s ruling. The newly elected Democratic majority in the U.S. House is also expected to support the appeal. This is the first step in what is expected to be a long legal process.

On Dec. 15, the Centers for Medicare & Medicaid Services (CMS) stressed that open enrollment for health coverage on the public Marketplaces would continue as planned, and there would be no impact to coverage or subsidies for 2019. While open enrollment ended in most states on Dec. 15, some state-run Marketplaces* have extended open enrollment periods. Individuals interested in purchasing coverage should confirm enrollment deadlines with their state-specific Marketplace.

Potential impact moving forward
If the ruling is upheld on appeals, the entire ACA – containing hundreds of provisions affecting all areas of the health care system – would be struck down. It would void ACA provisions such as protections for people with preexisting conditions, 100% coverage for certain preventive services, dependents remaining on their parents’ health plan until age 26, and more. It could also mean Americans who buy plans on the public Marketplace would be at risk of losing their health coverage, as well as those who receive coverage as a result of Medicaid expansion that has been adopted in 36 states plus the District of Columbia.

Short Term Insurance Plan Rule Will Not Be Finalized Till Fall

State insurance commissioners and officials coming out of a closed­ door meeting with CMS said the administration announced it will not finalize the rule on longer duration short­term plans until the fall and will delay implementation of that rule until January 2019.­  Several sources stressed that the delay of the rule means that issuers will be unable to factor in the potential impact of the non­compliant plans in their 2019 rates due to actuarial rules.

The administration’s announcement to state insurance commissioners came during a Saturday (March 24) closed­ door meeting with Center for Consumer Information and Oversight officials at the National Association of Insurance Commissioners spring meeting in Milwaukee, Wisconsin.

Comments on the proposed short­ term-limited ­duration plans rule are due April 23, and CMS representatives told the insurance commissioners they planned to wait until early fall, or potentially later, to release the final rule, according to those at the meeting. Furthermore, CMS will wait to implement the rule until 2019 rather than put it into effect right away.

The proposed rule, which reverses Obama­ era regulation that limited short­ term plans to three months, would let individuals purchase health insurance plans that do not meet the Affordable Care Act’s requirements for a period of 364 days.

Many insurers in the room expressed concern that the plans need to come out sooner so they can set their 2019 rates. Insurers begin setting their 2019 rates in the spring, finalize them in August and send the updated premiums to consumers on Oct. 1.

The commission said that the Trump administration officials did not give any reason as to why they were delaying the finalization of the rule until well after insurers set their 2019 rates.

A CMS official would not say when the rule would be released when asked by Inside Health Policy but said that the rule will not be effective until 60 days after it is finalized.

CMS remains committed to implementing the actions outlined in the President’s executive order in a timely and deliberate manner, the CMS official said.