Take Note of New Contribution Limits for These Health Plans

Health Savings Accounts (HSAs) and Excepted Benefit Health Reimbursement Arrangements (HRAs) allow your employees to cover their part of medical expenses in a tax-advanted and budget-conscious way. But because the cost of living and particularly the cost of healthcare tends to change over time, the IRS occasionally issues adjustments to contribution limits for those accounts. Here’s what you need to know about the recent changes to those limits.

For 2023, the contribution limits for these types of accounts, along with certain aspects of High Deductible Health Plans (HDHPs), have been raised. However, the HSA catch-up contribution limit for those aged 55 or older will stay the same, because it is not subject to cost of living increases.

Those limits will change as follows.

For HSAs…

• The individual contribution limit for 2022 is $3,650, and will climb to $3,850 in 2023
• The family contribution limit for 2022 is $7,300, and will climb to $7,750 in 2023

For Excepted Benefit HRAs…

• The contribution limit of $1,800 in 2022 will increase to $1,950 in 2023

These contribution limits are changing because the limits concerning High Deductible Health Plans are also changing. The maximum out-of-pocket limits for these plans refer to the absolute maximum that any individual or family will have to pay toward their share of healthcare expenses (except for premiums). The deductible refers to the plan’s requirement for the individual’s or family’s contribution before the healthcare plan kicks in to cover the bill.

For HDHPs,  out-of-pocket limits will be… 

• For individual coverage, the limit is $7,050 in 2022 and $7,500 in 2023
• For family coverage, the limit is $14,100 in 2022 and $15,000 in 2023

HDHP minimum annual deductibles will be… 

• For individual coverage, the minimum deductible is $1,400 in 2022 and $1,500 in 2023
• For family coverage, the minimum deductible is $2,800 in 2022 and $3,000 in 2023

If you sponsor one of these plans, you should update your payroll and plan administration systems for 2023, while also incorporating these new limits in any communications with participants (such as summary plan descriptions). If you have questions about the proper procedures for these tasks, give us a call and we’ll be happy to help.