IRS releases 2023 Health Savings Account (HSA) limits
UPDATE - May 17, 2023: View the IRS 2024 HSA contribution limits
The Internal Revenue Service (IRS) has announced the inflation-adjusted figures that apply to Health Savings Account (HSA) contributions in calendar 2023 and the minimum deductible and maximum out-of-pocket for HSA-qualified medical plans that begin in 2023.
The IRS publishes these figures each May after measuring general inflation (specifically, a measure labeled Chained-CPI) during the prior 12 months.
The maximum contribution to an HSA in 2023 increases from $3,650 to $3,850 for self-only coverage and from $7,300 to $7,750 for family coverage. The catch-up contribution for HSA owners who are age 55 or older on or before Dec. 31, 2023, remains at $1,000.
HSA contributions are tracked on the calendar year, even if a company’s medical plan renews on a date other than Jan. 1. Employees can make prospective changes through their employer’s Cafeteria Plan (if the plan permits pre-tax payroll deductions to fund HSAs) during calendar year 2023.
These contribution ceilings include funding from all sources. Thus, employer deposits made into employees’ HSAs reduce dollar-for-dollar the maximum that those workers can contribute to reduce their taxable incomes.
Employees can make personal tax-deductible contribution up to the date that they file their 2023 income tax returns (without individual extensions), or April 16, 2024. Workers can’t make payroll deductions for 2023 contributions through your company’s Cafeteria Plan after Dec. 31, 2023.
Employees enrolled in family coverage can contribute up the family limit, even if only the employee is eligible to fund an HSA.
Statutory minimum annual deductible
All plans that renew during calendar year 2023 must have a minimum annual deductible of $1,500 for self-only and $3,000 for family coverage. All services except those that are recognized under federal tax law as preventive care must be applied to the deductible.
These figures increased from $1,400 and $2,800 in 2022 and represent the first adjustment since 2020. The minimum annual deductible doesn’t change every year because the figures are low and can be adjusted only in increments of $50 for self-only coverage and $100 for a family plan.
Many plans have deductibles that exceed these minimum figures.
Statutory annual out-of-pocket maximum
The statutory annual out-of-pocket maximum increases to $7,500 for self-only and $15,000 for family coverage. This higher limit applies to all plans that renew during calendar year 2023. The ceiling applies to covered in-network services only. Plans with an out-of-network level of benefits aren’t restricted by federal law to a maximum (though state laws may impose out-of-pocket ceilings).
No one covered on any family plan, whether it’s HSA-qualified or not, can incur covered in-network out-of-pocket expenses greater than $9,100 before the plan pays for all covered in-network services. Thus, if the plan’s in-network out-of-pocket maximum for covered services exceeds $9,100, the federal maximum applies to each family member.
These figures increased substantially from $7,050 and $14,100 in 2022. The federal per-person maximum was $8,700 in 2022. Many plans have out-of-pocket ceilings below the maximum.
What these changes mean for employers
No action is required immediately. HSA-qualified plans that renew on or after Jan. 1, 2023, must have an in-network deductible no lower than $1,500 or $3,000. The in-network out-of-pocket maximum for covered services can be increased to the new higher limits.
When communicating 2022 contribution limits to employees, employers may want to reference the higher funding limits in 2023. The new figures will be relevant during the 2023 calendar year, regardless of when the plan renews.
Health Savings Accounts offered by Voya Benefits Company, LLC (in New York, doing business as Voya BC, LLC). Custodial services provided by an approved HSA custodian as indicated in the applicable custodial agreement.
This highlights some of the benefits of a Health Savings Account. If there is a discrepancy between this material and the plan documents, the plan documents will govern. Subject to any applicable agreements, Voya and WEX Health, Inc. reserve the right to amend or modify the services at any time.
The amount saved in taxes will vary depending on the amount set aside in the account, annual earnings, whether or not Social Security taxes are paid, the number of exemptions and deductions claimed, tax bracket and state and local tax regulations. Check with a tax advisor for information on whether your participation will affect tax savings. None of the information provided should be considered tax or legal advice.
This information is provided by Voya for your education only. Neither Voya nor its representatives offer tax or legal advice. Please consult your tax or legal advisor before making a tax-related investment/insurance decision.