The landscape of health savings account (HSA) contributions is changing, making 2024 a significant year for individuals and families alike. The IRS recently announced a substantial increase in HSA contribution limits in response to the rampant inflation experienced in recent years. Here's what you need to know and how you can leverage these changes to your advantage.
The 2024 HSA Landscape
For 2024, the maximum HSA contribution limit will rise to $4,150 for individuals and $8,300 for families. These new figures mark a considerable leap from 2023’s limits of $3,850 for an individual and $7,750 for families. This means you'll have more opportunities to save and cover potential healthcare costs.
Why the Jump?
Annual HSA contribution limits adjust each year for inflation. According to the Society for Human Resource Management (SHRM), adjustments are calculated using the Consumer Price Index for All Urban Consumers over the year ending March 21. The round-up is to the nearest $50. The catch-up contribution of $1,000, available for those aged 55 and over, remains fixed by statute.
Notably, 2023 saw approximately a 5.5% increase from 2022's contribution limits, which is a marked contrast to the 1.4% rise from 2021 to 2022.
The Benefits of Higher HSA Contribution Limits
HSAs, often paired with high-deductible health plans (HDHPs) as an additional workplace benefit, have been gaining traction. Assets in HSAs have grown year-over-year, hitting a monumental $100 billion threshold last year, according to HSA consultant Devenir Group LLC.
Eligibility and HDHP Updates
To be eligible to contribute to an HSA, you must have an HSA-qualified HDHP and not be enrolled in Medicare. In 2024, 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 raised the maximum amount that employers can contribute to an excepted-benefit health reimbursement arrangement in 2024 to $2,100—up from the 2023 amount of $1,950.
With the new HSA limits kicking in for the 2024 calendar year, there's never been a better time to consider how HSAs can enhance your financial and health insurance strategy. Plan ahead, stay informed, and make the most of these changes for your healthcare needs. The increase in HSA contributions is more than just numbers—it's about empowering you to take control of your healthcare expenses.