Health Savings Account Contribution Limits to Increase in 2024

By Jana Karr posted 07-28-2023 08:49 AM

Recommend

With 2023 more than halfway over, organizations are looking at benefits strategies and open enrollment plans for next year. It may not be a surprise to anyone that in 2024 the Internal Revenue Service (IRS) will once again increase the annual contribution limits for health savings accounts (HSAs).

The HSA is a tax-advantaged savings tool designed to help individuals and families manage health care costs. HSAs are a way to save for medical expenses and promote financial wellness pre- and post-retirement. HSAs have continued to gain popularity since 2006, when they started to be offered alongside high-deductible health plans (HDHPs).

Currently, the maximum annual contribution limit for individuals with self-only health coverage under an HSA-qualified HDHP is set at $3,850. For families with HDHP coverage, the current annual limit is $7,750. These contributions are tax-deductible, and any interest or earnings generated within the HSA account grows tax-free.

The IRS has announced an increase in the HSA contribution limits for 2024 to keep pace with inflation and the rising costs of health care. The new HSA contribution limits will be as follows:

For individuals with self-only HDHP coverage: The annual contribution limit will increase to $4,150, a 7.8% increase in tax-advantaged savings for eligible individuals.
For families with HDHP coverage: The annual contribution limit will rise to $8,300, offering a 7.1% increase in tax-free savings for families looking to set aside funds for medical expenses.

In 2024, to qualify as an HDHP, the annual deductible will increase to $1,600 for individual coverage and $3,200 for family coverage. This is important for employers that help fund HSAs in helping to determine if their contributions will increase next year.

The increase in HSA contribution limits in 2024 presents an opportunity for employees to allocate more funds toward their medical expenses in a tax-advantaged manner. By taking advantage of higher contribution limits, individuals and families can better prepare for health care expenses, ensure financial security, and potentially bolster their retirement savings.

If you offer an HDHP and have a corresponding HSA, communicate to employees the value of contributing to their HSA (and/or the value of the employer contribution) for now and into the future. If you have any questions, please email the Employers Council Member Experience Team.

#HealthBenefits
#EmployeeCommunication

0 comments

40 views

Blogs