ACA Updates & Reminders

It’s almost time for ACA reporting! There aren’t any major changes this year, but here are some items to be aware of for the 2024 tax year.

• The employee distribution deadline for the 1095-C forms is March 3, 2025. Since the 2023 tax year, the IRS requires all employers with more than ten (10) forms to report electronically. Employers can complete this either directly through the IRS website or through a third-party provider. Corrected forms are also required to be submitted electronically.
• If you’re submitting 10 or fewer forms, you can still file on paper. The deadline for this is February 28, 2025.
• The deadline for e-filing 1095-C and 1094-C forms to the IRS is March 31, 2025. Keep in mind that there could be additional ACA state reporting requirements for your organization with differing deadlines. The states to pay special attention to are California, New Jersey, Massachusetts, Rhode Island, and the District of Columbia.
• Updated penalties and affordability percentages. The ACA penalizes Applicable Large Employers (ALEs) that don’t offer what’s considered affordable coverage to full-time employees (FTEs). The affordability percentage is the maximum amount of an employee’s pay that “Employee Only” coverage can cost the employee in order to be considered affordable by ACA. For 2024, that percentage is 8.39%. The affordability percentage will jump to 9.02% for 2025, and the associated fines will increase as well. You can find out more about the Affordability Safe Harbors here.

Benefit Benchmarks and Contribution Changes for 2025

The IRS has released the 2025 cost-of-living adjusted limits for health savings accounts (HSAs), high-deductible health plans (HDHPs), and excepted benefit health reimbursement arrangements (EBHRAs). Here are the details:

• HSA Contributions: The 2025 annual HSA contribution limit is $4,300 for those with single coverage, and $8,550 for those with family coverage.
• HDHP Minimum Deductibles. The 2025 minimum annual deductible is $1,650 for single coverage and $3,300 for family coverage.
• HDHP Out-of-Pocket Maximums: The 2025 limit (including items such as deductibles, copayments, and coinsurance, but not premiums) is $8,300 for single coverage and $16,600 for family coverage.
• The Healthcare FSA contribution limit will increase to $3,300 in 2025.

Retirement Contribution Updates

The 401(k), 403(b), 457 and TSP contribution limit will be $23,500 for 2025.

For contributors aged 50+ (turning 50 before 12/31), the catch-up contribution limit will remain the same at $7,500 in 2025.

For contributors aged 60 through 63 there will be a higher catch-up limit of $11,250 in 2025.

The total contributions from both employer and employee to all plans by the same employer  will increase to $70,000 in 2025. The max annual compensation considered for making contributions to retirement plans is always five times (5x) the annual additions limit. The annual compensation limit will increase to $350,000 for 2025.

For employees whose contributions are limited as a result of being a Highly Compensated Employee (HCE), the minimum compensation to be counted as an HCE will go up to $160,000 in 2025.

Small employers may offer a SIMPLE 401k or a SIMPLE IRA plan instead of a regular 401(k). These plans have a lower contribution limit than standard 401(k) plans, and the contribution max increases to $16,500 in 2025.

The traditional IRA or Roth IRA contribution limit will stay the same for 2025 at $7,000.

This site has a handy chart of all of the changes from 2024 to 2025 if you’d like to learn more.