Are Inflation Adjustments by the Internal Revenue Service (IRS) on your radar? If you or your clients take advantage of High Deductible Health Plans (HDHP) and/or Health Savings Accounts (HSA), you manage contributions to these plans using payroll deductions or contributions, it should be.
The IRS recently announced the 2024 inflation adjustments for HDHP and HSA—adjustments that include maximum HSA contributions, minimum deductible amounts and maximum out-of-pocket limits.
The following adjustments are applicable to the calendar year 2024:
Contributions to a Health Savings Account
For calendar year 2024, the annual limit on contributions to an HSA under §223(b)(2)(A) for an individual with self-only coverage under an HDHP is $4,150.
The annual limit on contributions to an HSA under §223(b)(2)(B) for an individual with family coverage under an HDHP is $8,300.
Additional Contribution Amount(s)
For individuals 55 years of age and older, the catch-up contribution limit to an HSA is $1,000 under §223(b)(3)(B), which represent "no" change from 2023.
High Deductible Health Plans
An HDHP is defined under §223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,600 for self-only coverage or $3,200 for family coverage.
The annual out-of-pocket expenses—i.e., deductibles, co-payments and other amounts, but not premiums—do not exceed $8,050 for self-only coverage or $16,100 for family coverage.
Be aware that HDHP limits on out-of-pocket expenses and the maximum out-of-pocket limits under the Affordable Care Act are "not" the same as those specified above. The maximum out-of-pocket limits for 2024 are $9,450 for self-only coverage and $18,900 for non-self-only coverage.
What You May Need to Do
Because you may be responsible for deductions or contributions related to these plans as part of your Payroll process you should:
1) Contact your payroll service or software provider to ensure they are aware of these inflation factors
2) Review applicable deductions or contributions to these plans within your payroll program with the applicable employees to determine if any adjustment is needed
3) Make payroll adjustments as the employee requests up to the limits specified in the Plans deductions or contributions per the IRS inflation provisions
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