On May 16, 2023, the Internal Revenue Service (IRS) released its annual procedure outlining the adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPS). Revenue Procedure 2023-23 introduces significant changes that will take effect on January 1, 2024, influencing healthcare expenses and benefits.
Maximum HSA Contributions Limit
The maximum HSA contribution limit will rise in 2024 to $4,150 for individuals with self-only HDHP coverage, compared to the current limit of $3,850. For those with family coverage under an HDHP, the maximum HSA contribution will increase to $8,300, up from $7,750. This adjustment allows individuals and families to allocate more funds into their HSAs, enabling them to better manage and cover their healthcare expenses.
Minimum Deductible Amount for HDHPs
In 2024, the minimum deductible amount for HDHPs will undergo adjustments, with an increase from $1,500 to $1,600 for individuals and from $3,000 to $3,200 for families. This change emphasizes the high-deductible nature of HDHPs, requiring individuals to meet these thresholds before their insurance company covers any claim.
Maximum Out-of-Pocket Expense Limit for HDHPS
Alongside the minimum deductible, the maximum out-of-pocket expense limit for HDHPs will also increase. For self-only HDHP coverage, the maximum amount that individuals are required to pay out-of-pocket will increase from $7,500 to $8,050, while for the family coverage, it will rise from $15,000 to $16,100. Once the total out-of-pocket expenses reach this limit, the insurance plan typically covers 100% of the remaining eligible medical costs for the rest of the year, effectively serving as a cap on the financial responsibility individuals or families may incur for healthcare services under their HDHP.
HSA Contribution Limits for Individuals Age 55+
There will be no changes to the HSA catch-up limit rules for individuals aged 55 and above. The annual catch-up contribution remains at $1,000, allowing individuals closer to retirement the ability to save additional funds in their HSAs. This provision provides them with the opportunity to bolster their savings and better prepare for healthcare expenses during their later years.
EBHRA Inflation Adjustments
Revenue Procedure 2023-23 also addresses excepted benefit health reimbursement arrangements (EBHRAs) by setting the maximum amount at $2,100 in 2024, an increase from $1,950. The adjustment allows participating employers to provide their employees with a higher level of reimbursement for eligible healthcare expenses.
| Contribution & Out-of-Pocket Limits for HSAs and HDHPs | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| HSA Contribution Limit (Employer + Employee) | Self-Only: $4,150 Family: $8,300 | Self-Only: $3,850 Family: $7,750 | Self-Only: +$300 Family: +$550 |
| HSA Catch-Up Contributions (Age 55+) | $1,000 | $1,000 | No Change |
| HDHP Minimum Deductibles | Self-Only: $1,600 Family: $3,200 | Self-Only: $1,500 Family: $3,000 | Self-Only: +$100 Family: +$200 |
| HDHP Maximum Out-of-Pocket Amounts (Deductibles, Co-payments and other amounts, but not Premiums) | Self-Only: $8,050 Family: $16,100 | Self-Only: $7,500 Family: $15,000 | Self-Only: +$550 Family: +$1,100 |
Recommended Actions for Employers
Please contact your Pierce Group Benefits Account Manager for additional information about how this may affect your 2023 – 2024 HDHP/HSA offerings.