EMPLOVA BLOG

IRS Issues 2023 HSA & HDHP Limits

HSA Contribution Limits

The IRS has issued the inflation-adjusted HSA contribution and HDHP minimum deductible and out-of-pocket limits, effective for calendar year 2023.

Below is a comparison between the 2023 and 2022 limits.

20232022Change
Annual HSA Contribution Limit
(employer and employee)
Self-only: $3,850
Family: $7,750
Self-only: $3,650
Family: $7,300
Self-only: +$200
Family: +$450
HSA Catch-Up Contributions (age 55 or older)$1,000$1,000 No change
Minimum Annual HDHP DeductibleSelf-only: $1,500 Family: $3,000Self-only: $1,400 Family: $2,800Self-only: +$100 Family: +$200
Maximum Out-of-Pocket for HDHP (deductibles, co-pays & other amounts except premiums)Self-only: $7,500 Family: $15,000Self-only: $7,050 Family: $14,100Self-only: +$450 Family: +$900

*Source: IRS, Revenue Procedure 2022-24.

How should employers prepare?

Employers should begin updating payroll and plan administration systems, all relevant participant communications, such as open enrollment and communication materials, plan documents and summary plan descriptions with the new 2023 cost-of-living adjustments. Additionally, employers should start talking to their employees about making health care choices, and about these limits, during open enrollment season after the end of the summer.

A Reminder about Embedded Deductibles

HDHPs are typically structured with an aggregate family deductible. This means that when any dependents are covered on the plan, the deductible applies collectively to all family members, and the individual deductible is not taken into account.

However, there are some plans that have an embedded individual deductible. Notably, California law requires that HDHPs have an embedded individual deductible. This means that once an individual covered on a family plan meets the embedded individual deductible, the plan coinsurance would start to pay for that individual (but not for other family members). In order for such a plan to remain a qualified HDHP, the embedded individual deductible must be at least the minimum family deductible outlined above. As an example, the minimum embedded individual deductible on a family plan in 2023 would be $3,000.

HSA Contribution Reminders

  • Married couples with HSA-eligible family coverage will share one family HSA contribution limit of $7,750 in 2023. If both spouses have eligible self-only coverage, each spouse may contribute up to $3,850 in separate accounts.
  • If both spouses with family coverage are age 55 or older, they must have two HSA accounts in separate names if they each want to contribute an additional $1,000 catch-up contribution.
  • If only one spouse is 55 or older but the younger spouse contributes the full family contribution limit to the HSA in his or her name, the older spouse must open a separate account to make the additional $1,000 catch-up contribution.
  • Account holders who exceed the contribution limit are subject to an annual 6 percent excise penalty tax on the excess amount unless it is withdrawn from the HSA before the tax deadline for that year.

Additional Resources

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2023-irs-contribution-limits-for-hsas-and-high-deductibel-health-plans.aspx

https://www.irs.gov/pub/irs-drop/rp-22-24.pdf

 

*Information in this article is general in nature and not intended to replace legal advice in any particular manner.


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