Americans who have health savings accounts will be able to sock away more money into them than ever in 2024.
The Internal Revenue Service on Tuesday announced that the annual contribution limit in 2024 will jump to $4,150 for self-only coverage (up from $3,850 in 2023) and $8,300 for family coverage (up from $7,750 in 2023). The inflation-adjusted amounts mark the largest-ever increase to the amount of money that can contributed to the triple-tax advantaged accounts each year.
The increases are detailed in IRS Revenue Procedure 2023-23 and go into effect in January 2024.
HSA account holders age 55 and older can contribute an extra $1,000, which means an older married couple could sock away $10,300 a year, up from $9,750 this year.
To be eligible to contribute, a participant must have an HSA-qualified high-deductible health plan (HDHP) and not be enrolled in Medicare.
To qualify, an individual will need a HDHP with a minimum annual deductible of $1,600 for self-only coverage or $3,200 for family coverage. That is an increase from $1,500 and $3,000 in 2023.
An HSA allows individuals to set aside pre-tax money to pay for out-of-pocket medical expenses such as copayments, deductibles, and other qualified expenses. HSA funds can also be used to pay for Medicare Part B, Part D, and Medicare Advantage premiums, for those 65 or older.
An HSA does not require the account holder to begin distributing funds at a certain age. These funds remain in the account and are not “use it or lose it” like other types of flexible savings accounts.
Fully portable HSAs have long been attractive (if underutilized) for offering one of the best tax breaks in the entire tax code. They are uniquely triple-tax-advantaged, as contributions to the HSA reduce a person’s taxable income; the earnings grow tax-free; and qualified withdrawals (used to pay qualified health care expenses) are tax-free.
HSA assets are projected to pass $100 billion in 2023, and Devenir projects that the HSA market will approach 43 million accounts by the end of 2025, holding almost $150 billion in assets.
SEE ALSO:
• 2023 Changes to 401k, HSA Contribution Limits and a Historic Social Security COLA
• Inflation Sparks Big Jump in 2023 HSA Contribution Limits
• Who’s Leading in Health Savings Accounts?
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
