Seyfarth Synopsis: Recently HHS issued a memorandum announcing the maximum annual limitation on cost sharing (a/k/a out-of-pocket maximum) for 2026 and the IRS issued Rev. Proc. 2024-40 announcing the cost-of-living adjustments to certain welfare and fringe benefit plan limits for 2025.
2026 Out-of-Pocket Maximum
On October 8, 2024, the Department of Health and Human Services (HHS) released a memo announcing the 2026 cost-sharing limits applicable to health and welfare plans. The Affordable Care Act requires group health plans to have an out-of-pocket maximum which limits overall out-of-pocket costs or cost sharing on essential health benefits (EHBs) covered by a plan. The cost-sharing limit applies to deductibles, coinsurance, copayments, and any other expenditure required of an individual which is a qualified medical expense with respect to EHBs covered under the plan. Plans are not required to apply the out-of-pocket maximum on benefits that are non-EHBs.
The 2026 out-of-pocket maximums are $10,150 for self-only coverage and $20,300 for other than self-only coverage (e.g., family coverage, self plus one, etc.). This represents an approximate 10.3 percent increase from the 2025 limits which were $9,200 and $18,400, respectively. Note that the cost-sharing limits for high deductible health plans, which tend to be lower, will be announced at a later date.
2025 Limits for Certain Health and Fringe Benefits
Hopefully in time for open enrollment, the IRS has announced 2025 cost-of-living adjustments to various tax related limits, including the dollar limits for contributions to health flexible spending accounts (Health FSAs) and qualified transportation fringe benefit programs. The 2025 cost-of-living adjustments (and the changes from 2024) for these plans are summarized in the table below:
* Dependent Care FSA limits are set by statute and do not adjust for inflation.
