The latest dollar limits for health and welfare plans and fringe benefits have been revealed for 2026. Retirement plan limits are sure to follow soon. Below is a round-up of the limits that have been announced in various guidance that will apply for 2026.
Health Flexible Spending Accounts
Maximum Salary Reduction Contributions. The maximum amount that can be contributed as an employee salary reduction contribution to a health flexible spending account is $3,400. This is an increase of $100 from 2025.
Carry-Overs. If the health flexible spending account permits carry-overs of unused amounts, the limit on the carry-overs will increase by $20 to $680.
Guidance: Rev. Proc. 2025-32
High Deductible Health Plans
HSA Contributions. The maximum amount that can be contributed to a health savings account (HSA) for individuals covered under a high deductible health plan is $4,400 for self-only coverage (a $100 increase) and $8,750 for family coverage (a $200 increase). The catch-up contribution limit for those age 55 and older remains $1,000.
HDHP Deductible. The minimum deductible for an HSA compatible high deductible health plan (HDHP) is $1,700 for self-only coverage (a $50 increase) and $3,400 for family coverage (a $100 increase).
HDHP Out-of-Pocket Maximum. The maximum out-of-pocket limit for a HDHP is $8,500 for self-only coverage (a $200 increase) and $17,000 for family coverage (a $1,000 increase).
Guidance: Rev. Proc. 2025-19
ACA
Affordability Threshold. Under the employer mandate provisions of the Affordable Care Act, in order for coverage to be considered “affordable,” the employee’s required premium contribution for self-only coverage cannot exceed a certain percentage of “household income.” That percentage is 9.96% for 2026. That is an increase of .94% from 2025, meaning that the cost of coverage to employees may go up for 2026 and still be considered affordable.
Guidance: Rev. Proc. 2025-25
Cost Sharing Limits. CMS announced the cost-sharing limits for 2026 benefit year. The limit for self-only coverage is $10,150 (increased by $950) and for other than self-only coverage the limit is $20,300 (increased by $1,900).
Guidance: October 8, 2024 CMS Guidance
Penalties.
Reporting Penalties. Penalties for failures related to ACA information reporting requirements for the 2025 tax year, to be filed in 2026 have been increased as follows:
Filing a correct information return: $340 per return (increased by $10), subject to certain annual maximums, also adjusted annually. There are lesser penalties for corrective filings within certain timeframes and higher penalties for intentional failures (no limit).
Furnishing a correct statement to individuals: $340 per statement (increased by $10), subject to certain annual maximums, also adjusted annually. There are lesser penalties for late furnishing of statements within certain timeframes and higher penalties for intentional failures (no limit).
Guidance: Rev. Proc. 2025-25
4980H(a) Penalty. The penalty for failure to offer minimum essential coverage to eligible employees and dependents is $3,340 (an increase of $350).
Guidance: Rev. Proc. 2025-25
4980H(b) Penalty. The penalty for failure to offer coverage that is affordable and offers minimum value is $5,010 (an increase of $660).
Guidance: Rev. Proc. 2025-25
Adoption Assistance
Adoption Credit and Adoption Assistance Programs. The limit for both the credit and exclusion from gross income under an employer’s adoption assistance program is $17,670 (an increase of $390 from 2025).
Guidance: Rev. Proc. 2025-32
Qualified Transportation Fringe Benefits
Transit Passes and Transportation in a Commuter Highway Vehicle and Qualified Parking. The monthly limit in 2026 is $340 (increased by $15)
Guidance: Rev. Proc. 2025-32
HRAs
Qualified Small Employer Health Reimbursement Amounts. Total payment and reimbursement benefits for the year are $6,350 (increased by $200), or for family coverage, $12,800 (increased by $350)
Guidance: Rev. Proc. 2025-19
Excepted Benefit HRAs. Maximum amount made available for the 2026 plan year is $2,200 (increased by $50).
Guidance: Rev. Proc. 2025-19
Action Items
Plan sponsors should be aware of these changes and take appropriate action such as amendments, updating plan limits and participant communications.