On Tuesday, May 16th, the IRS announced the inflation adjustments that will apply to health savings accounts (HSAs) and qualified high deductible health plans (HDHPs) beginning January 1, 2024. Due in part to persistently elevated inflation over the past year, the year-over-year increase to allowable tax-exempt HSA contributions and out-of-pocket thresholds under HSA-compatible HDHPs are the largest since HSAs were first sanctioned by the IRS nearly 20 years ago.
The 2024 limits and statutory minimum deductible amounts were announced through Revenue Procedure 2023-23. The indexed figures are summarized in the table below, which compares them to the current 2023 numbers:
2023-2024 IRS Contribution Limits, Out-of-Pocket Maximums and Minimum Deductibles for HSAs and HDHPs
|
2023 |
2024 |
Difference |
|
|
HSA Contribution Limit (Employee Only*) |
$3,850 |
$4,150 |
+$300 |
|
HSA Contribution Limit (Family*) |
$7,750 |
$8,300 |
+$550 |
|
HDHP Minimum Deductible (Employee Only) |
$1,500 |
$1,600 |
+$100 |
|
HDHP Minimum Deductible (Family) |
$3,000 |
$3,200 |
+$200 |
|
HDHP Maximum Out of Pocket (Employee Only**) |
$7,500 |
$8,050 |
+$550 |
|
HDHP Maximum Out of Pocket (Family**) |
$15,000 |
$16,100 |
+$1,100 |
Revenue Procedure 2023-23 also indicates that the IRS will raise the maximum amount employers may contribute to an excepted-benefit health reimbursement arrangement (EBHRA) in 2024 to $2,100—an increase of $150, when compared to the 2023 limit of $1,950.
*The IRS catch-up contribution limit, which enables individuals aged 55 or older to make HSA contributions in excess of the employee-only and family thresholds listed above, will remain at $1,000 for 2024.
**Group plan sponsors should be aware that the Affordable Care Act (ACA) requires all non-grandfathered group medical plans offered to active employees to limit participants’ out-of-pocket expenses to different, greater thresholds than the IRS limits reflect above. In 2024, those out-of-pocket limits will be $9,450 for self-only coverage and $18,900 for family tiers. If your organization offers an HSA-compatible HDHP coverage option that is not grandfathered as defined under the ACA, that coverage option will be subject to both the IRS and ACA requirements.
In addition, the ACA requires that plans begin to pay the full cost of any individual family member’s benefits once an “embedded” out-of-pocket maximum is satisfied by that participant, even if their coverage is in place at the family tier. Under ACA rules, that individual embedded out-of-pocket limit must not exceed the individual ACA limit ($9,450 in 2024). This means that in a 2024 plan year, to comply with both the IRS and ACA rules, respectively, a non-grandfathered HDHP may have up to a $8,050 (self-only)/$16,100 (family) out-of-pocket limit, so long as there is also an embedded individual out-of-pocket limit no greater than $9,450 for all members covered under a tier other than employee-only. Plans may also be compliant while avoiding the embedded out-of-pocket requirement by applying the ACA individual limit of $9,450 as their out-of-pocket limit at the family level.
