Introduction: The IRS has released essential updates for Health Savings Accounts (HSAs), High Deductible Health Plans (HDHPs), and excepted benefit Health Reimbursement Arrangements (HRAs) for the year 2024. These changes bring adjustments to contribution limits, HDHP definitions, and HRA allowances. Let’s explore the key points of these updates.
Contribution Limits: For 2024, individuals with self-only HDHP coverage can deduct up to $4,150, while those with family coverage can deduct up to $8,300. These increased limits enable individuals to save more for healthcare expenses and enjoy greater tax benefits.
High Deductible Health Plan (HDHP) Criteria: To qualify as an HDHP in 2024, the plan must have an annual deductible of at least $1,600 for self-only coverage and $3,200 for family coverage. The out-of-pocket expenses (excluding premiums) should be at most $8,050 for self-only coverage or $16,100 for family coverage. Understanding these requirements is crucial when selecting an HDHP.
Non-Calendar Year Plans: If your HDHP follows a non-calendar year plan, changes to the annual deductible or out-of-pocket maximum can be implemented at the next renewal date after the start of the calendar year. This allows flexibility for organizations to align their plans with the updated IRS guidelines.
Catch-Up Contributions: Individuals aged 55 or older with a qualified HDHP can make catch-up contributions until they enroll in Medicare. The additional contribution limit is set at $1,000 from 2009 onwards. This provision empowers older individuals to boost their HSA savings as they approach retirement.
Excepted Benefit HRA Adjustment: Starting in 2024, the total amount that can be newly made available for an excepted benefit HRA is $2,100. This adjustment allows employers to offer additional benefits through HRAs, ensuring compliance with IRS regulations.
Conclusion: The IRS’s 2024 updates for HSAs, HDHPs, and HRAs introduce significant changes that impact individuals and employers alike. Increased contribution limits and adjusted HDHP criteria enable individuals to save more and make informed healthcare decisions. In addition, employers can utilize excepted benefit HRAs to offer additional benefits. Staying knowledgeable on these updates will help you optimize your healthcare plans and financial strategies for the coming year.
