The Internal Revenue Service (IRS) announced the largest increase in recent years to the amount individuals can set aside in a health-savings account (HSA) each year. The new limits are a significant jump, but they are not particularly surprising in the context of months and months of rising inflation, which has contributed to growing costs for employees. DM Payroll Solutions highlights these new amounts for 2024 so you can be prepared for employees’ increased contributions.   

The Basics 

An HSA is an account created or organized exclusively to pay the “qualified medical expenses” of an “account beneficiary.” An HSA can only be established for the benefit of an “eligible individual” who is covered under a High Deductible Health Plan (HDHP). In addition, a participant cannot be enrolled in Medicare or have other health coverage (exceptions include dental, vision, long-term care, accident and specific disease insurance). 

Know as a tax “triple threat,” there is no tax going in, tax-free growth and tax-free withdrawals if used for eligible healthcare expenses. Eligible medical expenses include doctor visits, deductibles, copays, vision and dental services, prescriptions and even long-long term care expenses. In addition, an HSA is portable and owned by the account holder if he or she changes employers or leaves the workforce.  

2024 Contribution Limits 

With these new increases, individuals and families can save more than ever before. A couple getting close to retirement could save $10,300 a year, allowing that couple to save over $100,000 in those accounts prior to retirement if they worked until age 65.  

Applying These Increases 

With these new increases to HSA contribution limits, employees are sure to benefit from increased savings. However, when it comes to updating employee HSA contribution amounts, how efficient is your benefits process? 

Contact DM Payroll Solutions today to learn how to effectively administer and manage these new HSA limits for your workforce using our integrated benefits administration and payroll software.