Why an End-of-the-Year Checklist is Essential for HR Professionals
November 21, 2023
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January 9, 2024
The Internal Revenue Service has established increased limits in 2024 for health savings accounts and employee benefits plans, and for benefits professionals, it’s important to prepare for these changes as we enter a new year. These increased limits present more opportunities for employees to maximize their healthcare savings in 2024.
Here's a quick rundown of the changes:
Health Savings Accounts (HSA)
- The annual contribution limit for self-only coverage jumps to $4,150 (up from $3,850 in 2023), and for families, it climbs to $8,300 (up from $7,750). These increases reflect rising healthcare costs, allowing employees to save more for qualified medical expenses.
- Catch-up bonus unchanged: Those 55 or older can still contribute an extra $1,000 per year.
Flexible Spending Accounts (FSA)
- The annual contribution limit for FSAs increases by $150, reaching $3,200. This lets employees contribute more pre-tax dollars to cover eligible expenses like vision care, dental care, and prescription drugs.
- Unused FSA funds can be carried over to the next year, but the IRS has capped the 2024 carryover at $640.
High-Deductible Health Plans (HDHP)
- Higher deductibles, higher out-of-pockets: To qualify for an HSA in 2024, an HDHP must have a minimum annual deductible of $1,600 for self-only coverage ($3,200 for families), up from $1,500 and $3,000, respectively. Similarly, the maximum annual out-of-pocket expenses (including deductibles) rise to $8,050 for self-only coverage and $16,100 for families, compared to $7,500 and $15,000 in 2023.
This Compliance Overview includes a chart of the inflation-adjusted limits for 2024. It also includes the 2023 limits for comparison purposes. Most of these limits will increase in 2024. Note that there are some benefit limits that are not indexed for inflation, such as the dependent care FSA limit and the catch-up contribution limit for HSAs.
Links and Resources
IRS Revenue Procedure 2023-23: 2024 limits for HSAs and HDHPs
IRS Notice 2023-75: 2024 limits for retirement plans
IRS Revenue Procedure 2023-34: 2024 limits for health FSAs, adoption assistance, and transportation fringe benefits