Employees to Benefit from Higher HSA Limits for Next Year

The IRS has recently released the inflation-adjusted amounts for health savings accounts (HSAs) for the year 2024. The notable outcome from the announcement is that employees will be able to present more money to HSAs next year. This update aims to provide individuals with more flexibility in managing their healthcare costs. Let’s explore the new contribution limits and high-deductible health plan (HDHP) thresholds for 2024 as summary by the IRS.

New Contribution Limits for 2024:

According to the IRS, there will be an increase in the annual contribution limits for HSAs in 2024. Transitioning to the updated limits, the following adjustments will take place:

• Self-only coverage costs $4,150 (up from $3,850 in 2023).
• Family coverage costs $8,300 (up from $7,750 in 2023).

These limits represent the maximum amount individuals can present to their HSAs for the various coverage types. By permitting higher contributions, employees will have the opportunity to set aside more funds for future health services costs while enjoying potential tax advantages.

High-Deductible Health Plan (HDHP) Thresholds:

In addition to the contribution limits, the IRS has also adapted the door for HDHPs in 2024. The updated amounts are as follows:

Annual deductible:

• $1,600 (up from $1,500 in 2023) for self-only coverage
• $3,200 (up from $3,000 in 2023) for family coverage

HDHP out-of-pocket expense maximum (excluding premiums):

• Self-only coverage costs $8,050 (up from $7,500 in 2023).
• $16,100 (up from $15,000 in 2023) for family coverage

Additionally, these limits determine the minimum deductibles and maximum out-of-pocket expenses individuals must meet to qualify for an HDHP. Furthermore, higher limits on deductibles and out-of-pocket expenses may reflect the rising costs of healthcare and the need for individuals to have enough coverage.

Furthermore, the updated contribution limits and HDHP limits will go into effect in January 2024, providing individuals with raised possibilities for saving and handling their healthcare costs. Significantly, these changes, as summarized in Revenue Procedure 2023-23, aim to ensure that HSAs continue to be an attractive option for individuals seeking tax advantages and greater control over their healthcare costs.

Moreover, the IRS’s announcement of higher contribution limits for HSAs in 2024 is welcome news for employees looking to save and plan for future healthcare expenses. Moreover, the increased limits notably provide individuals with more flexibility in using HSAs as a tax-advantaged tool.