2023 HSA/HDHP and MA PFML Changes
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October 26, 2022Benefits professionals in Massachusetts have two areas in which they need to prepare as the year winds down. The first involves increases in HSA and HDHP limits recently announced by the federal government. The second involves reduced contributions to the state of Massachusetts’ PFML program. Continue reading for full details.
Change #1: HSA/HDHP Limits Increase for 2023
On April 29, 2022, the IRS released Revenue Procedure 2022-24 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2023. The IRS is required to publish these limits by June 1 of each year.
These limits include:
- The maximum HSA contribution limit;
- The minimum deductible amount for HDHPs; and
- The maximum out-of-pocket expense limit for HDHPs.
These limits vary based on whether an individual has self-only or family coverage under an HDHP.
Eligible individuals with self-only HDHP coverage will be able to contribute $3,850 to their HSAs for 2023, up from $3,650 for 2022. Eligible individuals with family HDHP coverage will be able to contribute $7,750 to their HSAs for 2023, up from $7,300 for 2022. Individuals age 55 or older may make an additional $1,000 “catch-up” contribution to their HSAs.
The minimum deductible amount for HDHPs increases to $1,500 for self-only coverage and $3,000 for family coverage for 2023 (up from $1,400 for self-only coverage and $2,800 for family coverage for 2022). The HDHP maximum out-of-pocket expense limit increases to $7,500 for self-only coverage and $15,000 for family coverage for 2023 (up from $7,050 for self-only coverage and $14,100 for family coverage for 2022).
Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2023. Also, employers that allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.
Change #2: Massachusetts Announces PFML Rates for 2023
The Massachusetts Department of Paid Family and Medical Leave (PFML) has published the PFML contribution and maximum benefit rates for 2023.
Contribution Rate
Beginning in January 2023, employers with 25 or more covered individuals must send the department a contribution of 0.63% of covered employees’ eligible wages—down from 0.68% in 2022.
The contribution is apportioned between family leave and medical leave, with 0.52% going to medical leave and the remaining 0.11% going to family leave. Employers may withhold the following amounts from covered employees’ wages:
- Up to 100% of the family leave contribution (0.11% of an employee’s wages)
- Up to 40% of the medical leave contribution (0.208% of an employee’s wages)
Employers are responsible for contributing the remaining 60% of the medical leave contribution (0.312% of wages). The state has charts available further explaining employer contribution obligations.
Employers with fewer than 25 covered individuals must send an effective contribution rate of 0.318% of eligible wages. This contribution rate is less because small employers are not required to pay the employer’s share of the medical leave contribution.
Benefit Rate
Beginning in January 2023, the maximum total amount a covered employee will be allowed to receive in PFML benefits is $1,129.82 per week, up from $1,084.31 in 2022. The rate is based on the state average weekly wage.