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CCH® BENEFITS — 11/08/10

IRS Issues 2011 Adjusted Limits For Long Term Care, MSAs

from Spencer’s Benefits Reports: In Rev. Proc. 2010-40, the Internal Revenue Service provides a variety of inflation-adjusted figures for 2011, including figures for long term care, medical savings accounts (MSAs), and adoption assistance and tax credit limits.

This revenue procedure does not include a number of adjustments normally listed, including the qualified transportation fringe under IRC Sec.132 and the child tax credit under Sec. 24. According to Rev. Proc 2010-40, “Those items will be addressed in future guidance.”

Long term care. For tax years beginning in 2011, the limits under IRC Sec. 213(d)(10) for eligible long term care premiums deductible as “medical care,” based on the insured’s age before the close of the taxable year, are as follows:

• for those age 40 or younger, the limit is $340 ($330 in 2010);
• for those older than age 40 but not older than age 50, the limit is $640 ($620);
• for those older than age 50 but not older than age 60, the limit is $1,270 ($1,230);
• for those older than age 60 but not older than age 70, the limit is $3,390 ($3,290); and
• for those older than age 70, the limit is $4,240 ($4,110).

In addition, for 2011, the per-day limit applicable to aggregate payments for per diem-type long term care insurance contracts and amounts received by a chronically ill individual under a life insurance contract under IRC Sec. 7702B(d)(4) is $300 (up from $290).

Adoption assistance. Sec. 10909(a)(2) of the Patient Protection and Affordable Care Act increased the maximum adoption assistance exclusion under IRC Secs 137(a)(2) and (b)(1) from $10,000 to $13,170, and amended the inflation adjustment provisions of Sec 137(f).

Thus, for 2011, the maximum aggregate amount per child that an employer can provide an employee for adoption assistance under IRC Sec. 137(a)(2) or that an employee can claim for an adoption tax credit is $13,360 (up from $13,170 in 2010). The available adoption limit begins to phase out for employees with a modified adjusted gross income in excess of $185,210 (up from $182,520) and phases out entirely for employees with modified adjusted gross income of $225,210 (up from $222,520).

MSAs. For self-only coverage in 2010, a high-deductible health plan (HDHP) is defined in IRC Sec. 220(c)(2)(A) as a plan that has an annual deductible that is not less than $2,050 and not more than $3,050 (up from $2,000 and $3,000 in 2010) and annual out-of-pocket expenses that do not exceed $4,100 (up from $4,050). For family coverage in 2010, an HDHP has an annual deductible that is not less than $4,100 and not more than $6,150 (up from $4,000 and $6,050 in 2010) and annual out-of-pocket expenses that do not exceed $7,500 (up from $7,400).

For further information, contact Christina M. Glendening at (202) 622-4920.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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