- On September 23, 2024
With 2025 approaching fast, the IRS has begun to release some of next year’s indexing adjustments and benefit limits for health and welfare plans.
One of the most-watched IRS adjustments each year is the required contribution percentage used to determine whether employer-sponsored health coverage is considered affordable under the Affordable Care Act (ACA). The IRS has increased the affordable contribution percentage from 8.39% in 2024 to 9.02% in 2025. As a reminder, Applicable Large Employers (ALEs), subject to the ACA employer mandate, must offer affordable, minimum-value coverage to their ACA full-time employees. For 2025, a job-based health plan’s employee-only coverage needs to cost 9.02% or less of the employee’s household income to be considered affordable.
As a reminder, earlier this year, the IRS released some of next year’s indexing adjustments and benefit limits for health and welfare plans, including 2025 HSA contribution limits, minimum annual HDHP deductibles, and plan out-of-pocket maximums for HSA eligibility. The table below shows the limits that have been released as of September 23, 2024.*
The information the IRS has provided thus far is helpful, but there is still a lot of information coming as employers plan for 2025. This will include limits for FSA contributions, FSA carryovers, and the monthly Qualified Transportation Benefit.
*This table will be updated as new 2025 limits are provided.