The Internal Revenue Service (IRS) released its annual adjustments to health savings accounts (HSAs) and high deductible health plans (HDHPs) in Revenue Procedure 2023-23. These modifications, effective January 1, 2024, bring significant changes to healthcare expenses and benefits.
The chart shows the changes in contribution and out-of-pocket limits for HSAs and HDHPs for 2024:
| 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 |
Below are answers to some of the most common questions about the updated HSA and HDHP Limits:
Q: What is a high deductible health plan (HDHP), and how does it relate to Health Savings Accounts (HSAs)?
A: An HDHP is a health insurance plan with higher deductibles than traditional plans. Individuals with HDHPs often use HSAs to save for medical expenses. HSAs offer tax advantages, allowing contributors to set aside pre-tax dollars for qualified healthcare expenses.
Q: Do HSA funds expire, and what happens to unused balances over time?
A: One common question surrounding HSAs pertains to the longevity of funds and whether they expire. Fortunately, unlike some other types of accounts, HSA funds do not have an expiration date. They roll over from year to year, allowing individuals to accumulate savings for future healthcare needs.
Q: What are the key changes announced by the IRS for 2024 regarding HSAs and HDHPs?
A: The IRS has introduced several noteworthy changes, including an increase in the maximum HSA contribution limits, adjustments to minimum deductible amounts for HDHPs, and changes in the maximum out-of-pocket expense limits.
Q: How do the changes impact HSA contributions for individuals and families?
A: In 2024, the maximum HSA contribution limit rises to $4,150 for individuals and $8,300 for families. This allows contributors to allocate more funds to their HSAs, providing a larger savings for medical expenses.
Partnering with Pierce Group Benefits
As we navigate these changes, it’s important for employers to stay informed and adapt their offerings accordingly. If you have questions on how these adjustments may affect your HDHP and HSA offerings in 2024, we recommend reaching out to your Pierce Group Benefits Account Executive or email partnership@piercegroupbenefits.com. By staying proactive, employers can ensure that their employees benefit from these changes, promoting a healthier and more financially secure workforce.