global Tax HSA Limits Increase for 2024 May 25, 2023 Health savings account limits have increased, here’s what you should know. 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 2024. 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 2024? 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 2024 annual limit on deductible contributions is $4,150 for individuals with self-only coverage under an HDHP (up from $3,850 in 2023). The limit is $8,300 for family coverage for 2024 (up from 7,750 in 2023). 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 $1,600 for self-only coverage and $3,200 for family coverage, up $1,500 and $3,000 in 2023. The upper limit has increased to $8,050 for self only coverage for out-of-pocket expenses, and $16,100 for family coverage for out of pocket expenses (increased from $7,500 and $15,000 in 2023). 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.
