Health savings account (HSA) contribution limits for 2023 are going up significantly in response to the recent inflation surge, the IRS announced April 29, giving employers that sponsor high-deductible health plans (HDHPs) plenty of time to prepare for open enrollment season later this year.
The annual inflation-adjusted limit on HSA contributions for self-only coverage will be $3,850, up from $3,650 in 2022. The HSA contribution limit for family coverage will be $7,750, up from $7,300. The adjustments represent approximately a 5.5 percent increase over 2022 contribution limits, whereas these limits rose by about 1.4 percent between 2021 and 2022.
In Revenue Procedure 2022-24, the IRS confirmed HSA contribution limits effective for calendar year 2023, along with minimum deductible and maximum out-of-pocket expenses for the HDHPs with which HSAs are paired.
A Significant Jump
The higher limits for 2023 are “a significant jump, much higher than previous increases on an annual basis,” said Kevin Robertson, chief revenue officer at HSA Bank, which provides HSA administrative services.
The 2023 limits, he added, can be used by employers during open enrollment to encourage employees to start contributing to their accounts or to raise their current contribution rate. In addition, it may be a catalyst for employers who don’t already contribute to employees’ HSAs to begin doing so, “even if it’s a nominal amount, a couple of hundred dollars or whatever.” Employer contributions, he noted, tend to heighten employees’ engagement with their accounts and enhance the perceived value of their health care benefits.
Robertson said he’s seeing more employers interested in matching employees’ HSA contributions, as they typically do with 401(k) retirement plans, using formulas similar to common 401(k) matches.
“We’re also seeing more employers consider making income-based contributions that favor lower-paid employers” who may need extra help paying health care costs under a high-deductible plan, he said.
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Resource: SHRM, By Stephen Miller, CEBS