The IRS announced Tuesday that health savings account contribution limits for 2024 are being increased due to inflation.
For 2024, the maximum HSA contribution will be $4,150 for an individual and $8,300 for a family, the IRS announced Tuesday. This is up from $3,850 for an individual and $7,750 in 2023.
The annual inflation-adjusted limit on HSA contributions for self-only coverage under a high-deductible health plan is now $3,850, up from $3,650 in 2022. The HSA contribution limit for family coverage will be $7,750, up from $7,300.
According to SHRM, contribution limits are adjusted for inflation (rounded to the nearest $50) annually, using the Consumer Price Index for All Urban Consumers for the 12-month period ending on March 21. The catch-up contribution amount of $1,000 available to those older than 55, however, is fixed by statute.
The 2023 adjustments represented an approximately 5.5% increase from 2022 contribution limits, whereas the limit only rose by 1.4% from 2021 to 2022.
For 2022, the IRS raised the yearly deduction limit for individuals with self-only coverage under an HDHP to 3,650, a $50 increase from 2021. The annual limitation on deductions for an individual with family coverage under an HDHP was raised to $7,300, a $100 increase from the previous year.
High-deductible health plans are often paired with health savings accounts as an additional workplace benefit for employees. Assets in health savings accounts continue to rise year-over-year, growing to reach a landmark $100 billion threshold last year, according to research from HSA consultant Devenir Group LLC.
The higher contribution limit will go into effect for calendar year 2024, along with minimum deductible and maximum out-of-pocket expenses for the HDHPs that are paired with HSAs.
In addition, the IRS released that an HDHP must have a deductible of at least $1,600 for self-only coverage, up from $1,500 in 2023, or $3,200 for family coverage, up from $3,000.
The IRS also announced it will raise the maximum amount that employers may contribute to an excepted-benefit health reimbursement arrangement in 2024 to $2,100—up from the 2023 amount of $1,950.
“Healthy and happy employees make for happy employers,” says Jason Bornhorst, CEO and co-founder of First Dollar. “These adjustments allow employees to save on healthcare costs and taxes, which is good for plan sponsors.”
To be eligible to contribute to an HSA, a participant must have an HSA-qualified HDHP and not be enrolled in Medicare.