The IRS recently released Revenue Procedure 2022-24 with the 2023 annual contribution limits for health savings accounts “HSAs”. These limits are typically adjusted each year for inflation.
The 2023 limits are $3,850 for an individual with self-only coverage and $7,750 for an individual with family coverage. The indexed amounts represent an increase of $200 and $450 from 2022 respectively. Catch-up contributions for individuals age 55 or older remain $1,000. Such pre-tax contributions can only be made to an HSA that is maintained in conjunction with a high-deductible health plan.
A high-deductible plan for 2022 is defined as a plan with an annual deductible of $1,500 or more for self-only coverage or $3,000 or more for family coverage which is an increase from the 2022 amounts. The corresponding maximum out-of-pocket expenses are $7,500 and $15,000, respectively, which also represent increases from 2022.
HSAs continue to be a powerful tool in combating the rise in health costs. However, they have also seen a rise in utilization as a retirement planning tool, given that the accounts grow tax free as opposed to typical retirement accounts that grow tax deferred. Employers should continue to evaluate their effectiveness as part of the overall health benefits strategy.
If you should have any questions, please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301-231-6257.