IRS Increases 2023 HAS and HDHP Contributions

In late April, the IRS announced a significant increase in health savings account (HSA) and high-deductible plan (HDHP) contribution limits prompted by rising inflation.

Eligibility for HSAs is also changing as HDHP minimum deductibles rise. HSA Contribution Limits Increase Health savings accounts help Americans save money for medical expenses. A form of tax advantaged personal savings account, HSAs combine with high deductible health insurance policies to provide additional coverage. HSA contributions are tax deductible, accumulate tax-free, and are interest-bearing, so un-used funds will grow over time.

HSA holders can withdraw deposits at any time to cover medical expenses not covered by the HDHP for themselves or their family members. Funds roll over from one year to the next, and when the account holder reaches 65, they can withdraw the funds for other purposes without penalties.

In 2022, combined employer and employee HSA contribution limits are $3,650 for individuals and $7,300 for family plans. In 2023, these contributions will increase to $3,850 and $7,750, respectively, representing a 5.5% increase versus the previous year’s 1.4% increase. HSA catch-up contributions for those 55 or older remain the same at $1,000.

Married couples can share a single plan with family coverage and a contribution limit of $7,750. If both have access to HSA eligible individual coverage, they can each contribute up to $3,850 to their separate accounts. If both spouses are 55 or older, they will require separate accounts to each take advantage of the $1,000 catch-up contribution.

If one spouse is younger and the HSA is in their name, the spouse that is 55 or older will have to open a separate account to make the $1,000 catch-up contribution. Any deposits that exceed the contribution limits are subject to an annual 6% excise penalty tax unless the excess is withdrawn before that year’s tax deadline.