By Leanne M. Hassinger, EA, CFP®, Tax Senior Manager
IRS issues 2023 inflation adjusted amounts for contributions to Health Savings Accounts
A Health Savings Account (HSA) is a tax advantage account created or organized in the U.S. exclusively for the purpose of paying “qualified medical expenses” of an eligible individual. An HSA can only be established for the benefit of an “eligible individual” who is covered under a “high deductible health plan” (HDHP). Since the passage of the Affordable Care Act, many businesses and individuals have turned to HDHPs and HSAs in order meet their employee and individual health insurance needs.
A HDHP must conform to specific guidelines in order to qualify as an HDHP, but most generally, it is a plan that has “high” annual deductibles. These deductibles are adjusted annually for inflation and in 2022 such plans required out of pocket deductibles of $1,400 for individuals and $2,800 for families.
Contributions to HSAs are tax deductible but are subject to annual limits (adjusted annually for inflation). Contributions to an HSA can be made by an employee or an employer on a pretax basis.
To be deductible for a particular tax year, the contribution to an HSA must be made by the following April 15. For example, to be deductible for tax year 2022, contributions must be made by April 15, 2023.
HSA contribution and deduction limits for tax year 2022
For tax year 2022, the HSA contribution limits are $3,650 for a self-only plan and $7,300 for a family coverage plan. Individuals over age 55 can make a catch up contribution of $1,000 for the tax year.
HSA contribution and deduction limits for tax year 2023
The IRS has released the 2023 inflation-adjusted figures for contributions to HSAs which are as follows:
HSA annual contribution limit
For individuals with self-only coverage, the maximum contribution is $3,850; and for family coverage the maximum contribution is $7,750. Catch up contributions for those over age 55 remains at $1,000.
High Deductible Health Plan defined
The inflation adjusted out of pocket deductibles for calendar year 2023 jumped to $1,500 for self-only coverage and $3,000 for family coverage.
Questions about tax planning and savings opportunities with HSAs? Contact your Keiter Opportunity Advisor.
About the Author
Leanne M. Hassinger, EA, CFP®, Tax Senior Manager
Leanne focuses on providing tax and consulting services to individuals and family groups. With more than 19 years of experience, she specializes in multi-generational families involving complex individual taxation, with an emphasis on planning including trusts and gifting. In addition, Leanne has extensive experience with estate tax filings and is able to provide assistance to families throughout the estate settlement process.
More Insights from Leanne M. HassingerThe information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
