Updates to HSA and HRA Contribution Limits for 2022

Tax-advantaged accounts such as health reimbursement arrangement (HRA) and health savings account (HSA) are designed to help account owners manage healthcare expenses in a tax-friendly way. But because inflation, incomes, and other variables shift over time, the IRS does periodically review contribution limits so that the accounts remain relevant and helpful as intended. Their calculations are based upon the inflation index, and impact the coming fiscal year’s contribution limits.

Here’s what you should anticipate for 2022, as the IRS has already released their planned changes.

Health savings accounts are designed to be paired with high-deductible healthcare plans. This way, enrollees own more responsibility toward their own healthcare choices. But when healthcare prices rise, so do the out-of-pocket costs for consumers. Therefore, HSA contribution limits are often lifted to keep pace with potential expenses.

As for contribution limits, those will increase a bit next year. HSA savers can now set aside more tax-advantaged funds for their healthcare. However, the amount that HSA-compatible, high-deductible healthcare plans will expect enrollees to spend out of pocket will also rise. Minimum deductibles,  on the other hand, will remain the same.

HRAs were created to assist employers, so that they can contribute toward employee healthcare expenses. At the same time, employees are allowed greater choice in their healthcare options. Excepted-benefit HRA accounts can be tapped to pay for COBRA coverage, dental insurance, vision insurance, critical illness insurance, or disability insurance.

Contribution limits for HRAs will not increase next year, remaining at $1,800.

These issues can sometimes get confused, but we’re here to help. If you need more information on how HSAs and HRAs can impact individuals or employers, give us a call.