HSA and HDHP Limits for 2024
The IRS announced in May of 2023 the updated HSA contribution limits for 2024, which represent a significant increase compared to recent annual increases. The increases take effect in January 2024.
This jump creates opportunities for employers to reconsider their contribution amounts and remind employees to contribute as they plan for the enrollment process.
Read on to learn more about these updates and how you can use them to best prepare for your next open enrollment period.
Refresher: What Is an HSA?
A health savings account (HSA) is a personal bank account with significant tax advantages that an individual can use to pay for medical expenses, typically paired with a high-deductible health insurance plans (HDHP). A wide variety of banking institutions around the country offer these types of accounts to individuals and families.
To properly utilize their benefits, people with HSAs need to be enrolled in a compatible HDHP. They can use the money from their HSAs for qualified medical expenses, which can be determined by reviewing the IRS’s frequently asked questions on what services or products may be eligible for HSA spending.
Many procedures and items may qualify as necessary medical expenses that people can use HSA funds on. For example, certain cosmetic procedures are HSA-eligible, as well as products like sunscreen or face wash. To see other HSA-eligible products, check out the HSA store.
HSAs differ from flexible spending accounts (FSAs) as an HSA balance can be rolled over year after year. They can be used indefinitely so long as the purchase is a qualified medical expense. This is typically desirable for younger, healthier individuals who don’t utilize the sum of their yearly contributions by the time the term resets.
What Are the New HSA Contribution Limits?
The IRS announced increases to 2024 HSAs and HDHPs. The announcement was made on May 16, allowing plenty of time for employers to plan for the following open enrollment season.
| 2023 | 2024 | |
| HSA Contribution Limits Including Both Employer & Employee | Individual: $3,850 Family: $7,750 | Individual: $4,150 Family: $8,300 |
| HSA Catch-Up Contributions for Ages 55 & Up | $1,000 | $1,000 |
| HDHP Maximum Out-Of-Pocket Amounts Including Deductibles, Co-Payments, and Other Amounts **Not Including Premiums | Individual: $7,050 Family: $15,100 | Individual: $8,050 Family: $16,100 |
| HDHP Minimum Deductibles | Individual: $1,500 Family: $3,000 | Individual: $1,600 Family: $3,200 |
These new HSA and HDHP limits for the 2024 year represent a much larger jump than prior years. This opens up a unique opportunity for employers to increase their contributions. Employees may consider increased employer contributions as a desirable benefit that can lead to a stronger culture and increased retention.
