Mercer has projected 2021 limits for qualified transportation (parking and transit) benefits, health flexible spending arrangements (FSAs) and Archer medical savings accounts (MSAs). These unofficial 2021 limits are determined using the Internal Revenue Code (IRC)’s cost-of-living adjustment methods, chained Consumer Price Index for All Urban Consumers (chained CPI) values through July and Mercer’s projected chained CPI for August. IRS is expected to announce the official 2021 limits for these benefits in October.
Limits for adoption assistance programs are also based on chained CPI for the 12-month period ending Aug. 31, 2020, but can’t be reliably estimated in advance due to the small rounding threshold. IRS usually announces these limits in October, along with long-term care limits (based on the medical component of chained CPI for August).
Limits for qualified transportation fringe benefits and health FSAs are expected to stay the same in 2021. Archer MSA limits are expected to increase slightly.