The IRS has raised the maximum amount employees can funnel into their health savings accounts by 7.8% for 2024, the largest increase ever, brought to you by inflation.
The IRS updates this amount annually, along with minimum deductibles as well as the out-of-pocket maximums for high-deductible health plans. Under its rules, HSAs, which help employees save for medical expenses, are only available to those enrolled in qualified HDHPs.
Understanding these amounts now can help you get an early start on human resources planning for next year.
Here are the changes coming in 2024:
HSA annual contribution limit
HDHP minimum annual deductible
HDHP annual out-of-pocket maximum
Excepted benefit health reimbursement arrangement
The many benefits of HSAs
An HSA is a special bank account for your employees' eligible health care costs. They can put money into their HSA through pre-tax payroll deductions, deposits or transfers. As the amount grows over time, they can continue to save it or spend it on eligible medical and medical-related expenses.
Employers can also contribute to the accounts, but the annual contribution maximum applies to all contributions in total (from the employee and the employer).
The money in the HSA belongs to the employee and is theirs to keep, even if they switch jobs. If they go to a new employer that offers qualified HDHPs, they can continue to fund the account in their new job.
Funds roll over from year to year and can earn interest. Many plans also have investment options for the funds to help savers further grow the account.
There are a number of benefits for employees who have an HSA: