The Internal Revenue Service has released health savings account (HSA) contribution limits for calendar year 2023, welcome news for employers, employees, and HSA-eligible service providers alike.

“The Internal Revenue Service announced Friday that for the calendar year 2023, the health savings account contribution limits for an individual with self-only coverage will jump to $3,850—a significant $200 increase from $3,650 for this year. For family coverage, the HSA contribution limit jumps to $7,750 from $7,300 in 2022.”

Health plan minimum deductibles and out-of-pocket maximums are also increasing in 2023, indicating a potential shift toward more heavier utilization of HSA-funds.

Kevin Robertson, CRO of HSA Bank, asserts that these trends are “a strong validation that the IRS is looking at the real world ramifications of inflation and the cost pressures that we’re seeing across the market. For people who are strong spenders or utilizers of healthcare, this is a welcome addition.”

With inflation still outpacing HSA limit increases, employers are finding new and creative ways to support their employees through these challenges. One meaningful strategy is encouraging employees to maximize their HSA contributions, and matching these contributions to a specified percentage of compensation.

The most progressive employers are not waiting until Open Enrollment to start having these conversations with employees. They are allowing employees to change their contribution levels at any point in the year, and implementing strategies and tools to help offset potential future financial hardship for their teams.

It is widely agreed that HSAs are a smart strategy for medical expense saving throughout one’s career and even into retirement due to the triple tax benefits. Anyone benefitting from HSA-eligible alternative medicine services (acupuncture, massage, mental health counseling, functional medicine, chiropractic care, etc.) could recognize north of 30% savings simply by paying with HSA-funds instead of out-of-pocket.

HSA-enrollment continues to increase year over year, with over $100 Billion dollars accrued in 33 Million HSAs at the end of January 2022 (Devenir). The percentage of employers offering contributions to these accounts is also on the rise, with many employees now specifically seeking this benefit when identifying new career opportunities.

The IRS increases are detailed in IRS Revenue Procedure 2022-24 and will take effect in January 2023.