The Tax Cuts and Jobs Act (aka “Tax Reform”) enacted December 22, 2017, changed the measure of inflation to the average chained CPI-U (C-CPI-U) for the 12 month period ending August 31.
The August 2019 CPI was released by the Department of Labor and Thomson Reuters used the C-CPI-U for the 12 month period ending August 31 and has reported projected inflation adjustments for 2020 for health, charitable, compliance and other specialty items.
The updates for QSEHRA and Transportation benefits are as follows:
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) 2020
A QSEHRA under Code Sec. 9831(d)(2) is an arrangement which, among other requirements, makes payments and reimbursements for qualifying medical care expenses of an eligible employee.
The limits for 2020 are projected to increase as follows:
$5,250 for the employee only; or
$10,600 for an employee plus family members of the employee
These limits are up slightly from $5,150 and $10,450 for 2019.
Qualified Transportation Plan 2020
The report from Thomson Reuters did not include projections for Qualified Transportation benefits for 2020. However, last month Mercer published an article in August that included the following projections. Note, the Mercer projections are made in anticipation of the August CPI-U numbers.
Parking $270 per month
Transit (transit passes and/or transportation in a commuter highway vehicle) $270 per month
These limits are up slightly from the $265 limit for both parking and transit for 2019.
These benefit plan adjustments are not official until the IRS releases a Revenue Procedure on this and other benefit limits later this fall and we will report any additional updates to these limits as they may become available.