quickly to implement and communicate 2024 health spending account (“HFSA”), high deductible health plan amounts relevant to determining eligibility to contribute to a medical savings account (“MSA”), adoption credit and exclusion limits, and other inflation-adjusted limitations relevant to the annual enrollment, withholding and other year-end tax and benefit planning of workers and their families to assist workers to take into account these adjustments during 2024 benefit enrollment and tax planning.
The Internal Revenue Service announced the 2024 HFSA, MSA and other a multitude of other adjustments likely to impact 2024 benefit elections, withholding and other tax planning for workers in Rev. Proc. 2023-34 (“Revenue Procedure”) on Thursday, November 9, 2023.
HFSA, HDHP & MSA, Adoption & Other Adjustments Impacting Cafeteria Plan Elections
The Revenue Procedure announces a host of inflation adjustments that could impact employee’s 2024 cafeteria plan and health plan elections.
HFSA Limit. For taxable years beginning in 2024, the dollar limitation under Internal Revenue Code § 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements (“HFSAs”) is $3,200.
The $3200 HFSA limit for 2024 is a slight increase from the 2023 limit of $3,050.
If the employer’s plan permits the carryover of unused HFSA amounts, employees can carry over up to $640 in 2024. That is $30 over the 2023 carryover amount of $610.
HDHP. The Revenue Procedure also adjusts the deductible required for a health plan to qualify as a “high deductible health plan” (“HDHP”) for which the Code allows tax preferred contributions to Medical Savings Accounts (“MSAs”). As adjusted in the Revenue Procedure, for taxable years beginning in 2024 the term “high deductible health plan” as defined in § 220(c)(2)(A) means:
- For self-only coverage, a health plan that has an annual deductible that is not less than $2,800 and not more than $4,150, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $5,550.
- For family coverage, a health plan that has an annual deductible that is not less than $5,550 and not more than $8,350, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $10,200.
Qualified Small Employer Health Reimbursement Arrangement
For taxable years beginning in 2024, to qualify as a qualified small employer health reimbursement arrangement under § 9831(d), the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $6,150 ($12,450 for family coverage).
Adoption Assistance Programs & Adoption Credit Limits
For taxable years beginning in 2024, Code § 137(a)(2) caps the amount excludible from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for adoptions by the employee at $16,810, subject to the applicable phase out for taxpayers with adjusted gross income above $252,150.
The amount excludable from an employee’s gross income begins to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $252,150 and is completely phased out for taxpayers with modified adjusted gross income of $292,150 or more.
Similarly, for taxable years beginning in 2024, $16,810 is the maximum credit allowed under § 23 for an adoption of a special needs child as well as for other adoptions. The otherwise available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $252,150 and is completely phased out for taxpayers with modified adjusted gross income of $292,150 or more.
Child Tax Credit
For taxable years beginning in 2024, the amount used in Code § 24(d)(1)(A) to determine the amount of credit under § 24 that may be refundable is $1,700. .06 Earned Income Credit. (1) In general. For taxable years beginning in 2024, the following amounts are used to determine the earned income credit under § 32(b). The “earned income amount” is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The “threshold phaseout amount” is the amount of adjusted gross income (or, if greater, earned income) above which the maximum amount of the credit begins to phase out. The “completed phaseout amount” is the amount of adjusted gross income (or, if greater, earned income) at or above which no credit is allowed. The threshold phaseout amounts and the completed phaseout amounts shown in the table below for married taxpayers filing a joint return include the increase provided in § 32(b)(2)(B), as adjusted for inflation for taxable years beginning in 2024. The threshold phaseout amounts and the completed phaseout amounts shown in the table below for taxpayers with all other filing statuses also apply to married taxpayers who are not filing a joint return and satisfy the special rules for separated spouses in § 32(d).
Number of Qualifying Children
| Item | One | Two | Three or More | None |
| Earned Income Amount | $12,390 | $17,400 | $17,400 | $8,260 |
| Maximum Amount of Credit | $4,213 | $6,960 | $7,830 | $632 |
| Threshold Phaseout Amount (Married Filing Jointly) | $29,640 | $29,640 | $29,640 | $17,250 |
| Completed Phaseout Amount (Married Filing Jointly) | $56,004 | $62,688 | $66,819 | $25,511 |
| Threshold Phaseout Amount (All other filing statuses) | $22,720 | $22,720 | $22,720 | $10,330 |
| Completed Phaseout Amount (All other filing statuses) | $49,084 | $55,768 | $59,899 | $18,591 |
For taxable years beginning in 2024:
- The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (1) $1,300, or (2) the sum of $450 and the individual’s earned income; and
- The additional standard deduction amount for the aged or the blind is $1,550. This additional standard deduction amount is increased to $1,950 if the individual is also unmarried and not a surviving spouse.
Qualified Transportation Fringe Benefit
For taxable years beginning in 2024, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $315. The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $315.
Eligible Long-Term Care Premiums & Periodic Payments
For taxable years beginning in 2024, the limitations under § 213(d)(10), regarding eligible long-term care premiums includible in the term “medical care”, as adjusted for inflation, are as follows:
| Attained Age Before the Close of the Taxable Year | Limitation on Premiums |
| 40 or less | $470 |
| More than 40 but not more than 50 | $880 |
| More than 50 but not more than 60 | $1,760 |
| More than 60 but not more than 70 | $4,710 |
| More than 70 | $5,880 |
For calendar year 2024, the stated dollar amount of the per diem limitation under § 7702B(d)(4), regarding periodic payments received under a qualified long-term care insurance contract or periodic payments received under a life insurance contract that are treated as paid by reason of the death of a chronically ill individual, is $410.
2024 Income Tax Tables and Standard Exemption amounts just released by the Internal Revenue Service (“IRS”) may help employees and their families in updating their W-4 withholding and planning certain employee benefit or other elections for 2024.
The updated 2024 Income Tax Rate tables included in Revenue Procedure 2023-34, released by the IRS on October 9, 2023 are as follows:
TABLE 1 – Section 1(j)(2)(A) –Married Individuals Filing Joint Returns and Surviving Spouses
| If Taxable Income Is: | The Tax Is: |
| Not over $23,200 | 10% of the taxable income |
| Over $23,200 but not over $94,300 | $2,320 plus 12% of the excess over $23,200 |
| Over $94,300 but not over $201,050 | $10,852 plus 22% of the excess over $94,300 |
| Over $201,050 but not over $383,900 | $34,337 plus 24% of the excess over $201,050 |
| Over $383,900 but not over $487,450 | $78,221 plus 32% of the excess over $383,900 |
| Over $487,450 but not over $731,200 | $111,357 plus 35% of the excess over $487,450 |
| Over $731,200 | $196,669.50 plus 37% of the excess over $731,200 |
TABLE 2 – Section 1(j)(2)(B) – Heads of Households
| If Taxable Income Is: | The Tax Is: |
| Not over $16,550 | 10% of the taxable income |
| Over $16,550 but not over $63,100 | $1,655 plus 12% of the excess over $16,550 |
| Over $63,100 but not over $100,500 | $7,241 plus 22% of the excess over $63,100 |
| Over $100,500 but not over $191,950 | $15,469 plus 24% of the excess over $100,500 |
| Over $191,950 but not over $243,700 | $37,417 plus 32% of the excess over $191,150 |
| Over $243,700 but not over $609,350 | $53,977 plus 35% of the excess over $243,700 |
| Over $609,350 | $181,954.50 plus 37% of the excess over $609,350 |
TABLE 3 – Section 1(j)(2)(C) – Unmarried Individuals (other than Surviving Spouses and Heads of Households)
| If Taxable Income Is: | The Tax Is: |
| Not over $11,600 | 10% of the taxable income |
| Over $11,600 but not over $47,150 | $1,160 plus 12% of the excess over $11,600 |
| Over $47,150 but not over $100,525 | $5,426 plus 22% of the excess over $47,150 |
| Over $100,525 but not over $191,950 | $17,168.50 plus 24% of the excess over $100,525 |
| Over $191,950 but not over $243,725 | $39,110.50 plus 32% of the excess over $191,150 |
| Over $243,725 but not over $609,350 | $55,678.50 plus 35% of the excess over $243,725 |
| Over $609,350 | $183,647.25 plus 37% of the excess over $609,350 |
TABLE 4 – Section 1(j)(2)(D) – Married Individuals Filing Separate Returns
| If Taxable Income Is: | The Tax Is: |
| Not over $11,600 | 10% of the taxable income |
| Over $11,600 but not over $47,150 | $1,160 plus 12% of the excess over $11,600 |
| Over $47,150 but not over $100,525 | $5,426 plus 22% of the excess over $47,150 |
| Over $100,525 but not over $191,950 | $17,168.50 plus 24% of the excess over $100,525 |
| Over $191,950 but not over $243,725 | $39,110.50 plus 32% of the excess over $191,150 |
| Over $243,725 but not over $365,600 | $55,678.50 plus 35% of the excess over $243,725 |
| Over $365,600 | $98,334.75 plus 37% of the excess over $365,600 |
TABLE 5 – Section 1(j)(2)(E) – Estates and Trusts
| If Taxable Income Is: | The Tax Is: |
| Not over $3,100 | 10% of the taxable income |
| Over $3,100 but not over $11,150 | $310 plus 24% of the excess over $3,100 |
| Over $11,150 but not over $15,200 | $2,242 plus 35% of the excess over $11,150 |
| Over $15,200 | $3,659.50 plus 37% of the excess over $15,200 |
For taxable years beginning in 2024, $1,300 is the amount used for purposes of § 1(g)(7) to determine whether a parent may elect to include a child’s gross income in the parent’s gross income and to calculate the “kiddie tax.” For example, one of the requirements for the parental election is that a child’s gross income is more than the amount referenced in § 1(g)(4)(A)(ii)(I) but less than 10 times that amount; thus, a child’s gross income for 2024 must be more than $1,300 but less than $13,000.the amount in § 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned income reported on the child’s return that is subject to the “kiddie tax,” is $1,300. This $1,300 amount also is the same as the amount provided in § 63(c)(5)(A), as adjusted for inflation.
| Filing Status | Standard Deduction |
| Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(j)(2)(A)) Heads of Households (§ 1(j)(2)(B)) | $29,200 |
| Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(j)(2)(C)) | $21,900 |
| Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(j)(2)(C)) | $14,600 |
| Married Individuals Filing Separate Returns (§ 1(j)(2)(D)) | $14,600 |
For taxable years beginning in 2024, the standard deduction amounts under § 63(c)(2) are as follows:
For More Information
We hope this update is helpful. For more information about this or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
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About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits & Other Compensation GroupMs. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As a part of this work, she has continuously and extensively worked with domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; EMR, claims, payroll and other technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, self-insured health and other employee benefit plans, their sponsors, fiduciaries, administrators and service providers, insurers and other payers, health industry advocacy and other service providers and groups and other health and managed care industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.
Ms. Stamer is most widely recognized for her decades-long leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. This involvement encompasses helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement; and other strategic and operational concerns.
Author of leading works on HIPAA and a multitude of other health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
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