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HSA Limits Increase for 2023

May 05, 2022

Health savings account limits have changed for 2023, here’s what you should know.

You may not be thinking about 2023 contributions to your HSA at this point, but the Internal Revenue Service has announced the annual inflation-adjusted limits on deductions for contributions to a health savings account (HSA) allowed for taxpayers with family coverage under a high-deductible health plan (HDHP) for calendar year 2023. What has changed? Let’s dive in.

What is a health savings account (HSA)?

A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the U.S. who are enrolled in a high deductible health plan. HSAs are essentially like personal savings accounts used for qualified healthcare expenses. The benefits of HSAs are that the contributions employees make are tax deductible, employees do not have to use HSA funds until they need them, and money rolls over from year to year and continues to earn interest.

What has changed for 2023?

Individuals who participate in an HDHP are permitted a deduction for contributions to HSAs set up to help pay their medical expenses. The contribution deduction limit is subject to an annual inflation adjustment.

The 2023 annual limit on deductible contributions is $3,850 for individuals with self-only coverage under an HDHP. This is a $200 increase from 2022. The limit is $7,750 for family coverage for 2023 (a $450 increase from 2022). Individuals age 55 and older are allowed an additional $1,000 contribution before the end of the tax year.

Note that the limits on annual deductible are also subject to annual inflation adjustments. The lower limit on the annual deductible for an HDHP is $1,500 for self-only coverage and double that for family coverage, up $1,400 and $2,800 in 2022. The upper limit has increased to $7,500 for self only coverage for out-of-pocket expenses, and $15,000 for family coverage for out of pocket expenses (increased from $7,050 and $14,100).

Did the CARES Act change HSAs?

As part of the Coronavirus Aid, Response and Economic Security (CARES) Act, taxpayers can use HSAs, health reimbursements arrangements (HRAs) or health flexible spending account (FSAs) to pay for over the counter medications without a prescription.

Questions on the new contribution limits? We can help.

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