Amid soaring inflation, annual health savings account limits for 2023 are increasing in one of the biggest jumps in recent years.
The Internal Revenue Service announced Friday that for the calendar year 2023, the health savings account contribution limits for an individual with self-only coverage will jump to $3,850—a significant $200 increase from $3,650 for this year. Last year, the amount climbed just $50 from $3,600 for 2021. For family coverage, the limit jumps to $7,750 next year from $7,300 in 2022.
Meanwhile, for 2023, the health plan must have a deductible of at least $1,500 for self-only coverage, up from $1,400 in 2022, or $3,000 for family coverage, up from $2,800.
Out-of-pocket maximums also are increasing significantly. For 2023 individual coverage, those will increase to $7,500 from $7,050 and to $15,000 from $14,100 for family coverage for 2023.
Even so, the 5.5% increase for HSA limits is much lower than the current inflation rate, which is 8.5%, according to the latest consumer price index. With those big cost-of-living increases impacting employees in all facets of life, employers are—and should be—thinking about how they can help, experts say. Encouraging employees to up their HSA contributions can be a helpful tactic to assist with medical costs. Employers often promote HSAs and encourage workers to increase their contributions during open enrollment, though HR and benefits leaders can start that conversation now.
Related: Time for employers to act as healthcare costs skyrocket
Many industry insiders tout health savings accounts as a smart way for employees to save for medical expenses (even in retirement), citing their triple tax benefits. HSA enrollment continues to grow, and more employers also are offering contributions to employees’ accounts. At the end of January, Americans held $100 billion in 33 million health savings accounts, according to HSA advisory firm Devenir.
The IRS increases are detailed in IRS Revenue Procedure 2022-24 and take effect in January.
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