HSA Limit Increase for 2023 Means More Opportunities to Build Health Savings

Inflation. That’s the word on everyone’s minds these days. The higher it goes, the less take-home pay there is. But there is something positive to look forward to in this 40-year high inflation event: a substantial increase in Health Savings Account (HSA), High-Deductible Health Plans (HDHPs) and Excepted-Benefit Health Reimbursement Arrangements (HRAs) limits for 2023.

At the end of April, the IRS announced updated contribution amounts adjusted for inflation. Here’s a breakdown:

 HSA Plans

• $3,850 individual coverage limit (a $200 increase from 2022)
• $7,750 family coverage limit (a $450 increase from 2022)
• $1,000 individual members 55 and over additional contribution (unchanged from 2022)

HDHP and HRA Plans

• $1,500 minimum annual deductible for self-only HDHP coverage.
• $3,000 minimum annual deductible for family HDHP coverage.
• $7,500 limit on out-of-pocket expenses for self-only HDHP coverage.
• $15,000 limit on out-of-pocket expenses for family HDHP coverage.
• $1,950 maximum benefit amount for EBHRAs.

An estimated 60 percent of U.S. adults say they wouldn’t be able to cover the cost of a $1,000 trip to the emergency room from their savings. If employees took advantage of an HSA’s pre-tax advantages and put more money aside, they would have a true savings tool that could help pay for future medical expenses.

The new increased contribution limits create unique opportunities for you as an employer to help your employees build their health savings. When employees have more sustainable health savings, you also reap the benefits. Here are three important considerations. 

Contributions are tax deductible

One hundred percent of HSA contributions are tax deductible. When your employees contribute to their HSAs through payroll deductions, the contribution is made pre-tax, which saves you their portion of FICA taxes (7.65 percent).

Financial stresses affect productivity

Employees are constantly concerned with the ever-rising costs of health care benefits, leaving them financially stressed and less impactful as an employee. With the increased contribution limits, employers have an opportunity to educate and encourage employees to use the HSA as it was intended—a savings vehicle that can help them be better financially prepared for an emergency event in the future.

Incentive for Attracting Employees

A great health benefits package is still at the top of the must-have list for job seekers. In today’s competitive employment environment, having the right plan, including an HSA savings plan, can be your competitive advantage when it comes to attracting top talent.  

Helping your employees build their health savings starts with the right plan design. Let MBA Benefit Administrators and our team of independent brokers help you design a benefits package with cost-saving strategies and integrated technology that gives you back control over rising health care costs and gives your employees access to more funds to manage health care expenses. We invite you to learn more about how our innovative approach can impact your organizations health benefits.