Annual health savings account (HSA) contribution limits for 2024 are increasing in one of the biggest jumps in recent years: The annual limit on contributions for self-only coverage will be $4,150 (a 7.8% increase from the $3,850 limit in 2023) and for family coverage, the contribution limit will jump to $8,300 (up 7.1% from $7,750).
Participants 55 and older can contribute an extra $1,000 to their HSAs (this amount is unchanged from prior years).
Meanwhile, for 2024, a high-deductible health plan (HDHP) must have a deductible of at least $1,600 for self-only coverage (up from $1,500 in 2023) or $3,200 for family coverage (up from $3,000). Annual out-of-pocket expense maximums (deductibles, co-payments and other amounts, but not premiums) cannot exceed $8,050 for self-only coverage in 2024 (up from $7,500), or $16,100 for family coverage (up from $15,000).
The IRS will also raise the maximum amount that employers may contribute in 2024 to an excepted-benefit health reimbursement arrangement (HRA) to $2,100—up from the 2023 amount of $1,950. And in 2024, participants in a flex spending account (FSA) will be able to contribute a maximum of $3,200 (up from $3,050 in 2023).
The increases are detailed in IRS Revenue Procedure 2023-23 and take effect in January 2024. Our 2024 HSA, FSA, and HRA comparison chart is a great one-stop resource to effectively manage the new information for all three types of accounts.
The new limits are a significant jump, but they are not surprising in the context of rising inflation, which has contributed to growing costs for employees.
The increase in 2024 HSA limits is significant in that for the first time, including catch-up contributions for those ages 55 and older, a couple on family coverage can now contribute more than $10,000 tax-free to their account, and a single person on self-only coverage can now contribute more than $5,000.
Many industry experts tout HSAs as a smart way for employees to save for medical expenses, even in retirement, citing their triple tax benefits: Contributions are made pre-tax, the money in the accounts grows tax-free and withdrawals for qualified medical expenses are also tax-free.
Despite the benefits, most holders aren’t taking full advantage of their accounts and are missing out on substantial rewards; the average account holder has a modest balance and contributes far less than the maximum and does not invest their HSA, according to the Employee Benefit Research Institute. Perhaps with inflation and the above changes, an increase in activity to further max out the benefits of these accounts will be evident in the near future.