The IRS has just announced 2024 amounts for Health Savings Accounts

The IRS recently released guidance providing the 2024 inflationadjusted amounts for Health Savings Accounts (HSAs). HSA fundamentals An HSA is a trust created or organized exclusively for the purpose of paying the “qualified medical expenses” of an “account beneficiary.” An HSA can only be established for the benefit of an “eligible individual” who is covered under a “highdeductible health plan.” In addition, a participant can’t be enrolled in Medicare or have other health coverage (exceptions include dental, vision, longterm care, accident and specific disease insurance). Within specified dollar limits, an abovetheline tax deduction is allowed for an individual’s contributions to an HSA. This annual contribution limitation and the annual deductible and outofpocket expenses under the tax code are adjusted annually for inflation. Inflation adjustments for next year In Revenue Procedure 202323, the IRS released the 2024 inflationadjusted figures for contributions to HSAs, which are as follows: Annual contribution limitation. For calendar year 2024, the annual contribution limitation for an individual with selfonly coverage under an HDHP will be $4,150. For an individual with family coverage, the amount will be $8,300. This is up from $3,850 and $7,750, respectively, in 2023. There is an additional $1,000 “catchup” contribution amount for those age 55 and older in 2024 (and 2023). Highdeductible health plan defined. For calendar year 2024, an HDHP will be a health plan with an annual deductible that isn’t less than $1,600 for selfonly coverage or $3,200 for family coverage (up from $1,500 and $3,000, respectively, in 2023). In addition, annual outofpocket expenses (deductibles, copayments, and other amounts, but not premiums) won’t be able to exceed $8,050 for selfonly coverage or $16,100 for family coverage (up from $7,500 and $15,000, respectively, in 2023). Advantages of HSAs There are a variety of benefits to HSAs. Contributions to the accounts are made on a pretax basis. The money can accumulate taxfree year after year and can be withdrawn taxfree to pay for a variety of medical expenses such as doctor visits, prescriptions, chiropractic care and premiums for longterm care insurance. In addition, an HSA is “portable.” It stays with an account holder if he or she changes employers or leaves the workforce. Contact your employee benefits and tax advisors if you have questions about HSAs at your business. © 2023 |