Looking for a silver lining to the highest annual inflation rate since the early 1980s? Well, here's one: The IRS has announced (in Rev. Proc. 2023-23) the inflation-adjusted health savings account (HSA) contribution limits for 2024 revealing big increases.

Those with self-only coverage will be able to contribute $4,150 for 2024 (up from $3,850 for 2023).  Family coverage similarly increased and, for 2024, the annual contribution limit will be $8,300 (up from $7,750 in 2023).  The catch-up contribution limit (applicable to those age 55 and older) remains unchanged at $1,000.  HSA contributions are a tax planner's dream given that eligible contributions are pre-tax, can grow tax-free (if invested) and can be distributed tax-free for eligible expenses.  

The tradeoff is that the minimum annual deductible and maximum out-of-pocket have also been adjusted for inflation meaning that those looking to save in HSAs.  In order to save in a HSA, a participant must participate in a HSA-compatible coverage, such as a high-deductible health plan (HDHP).  For 2023, a HDHP must have an annual deductible that is not less than $1,600 for self-only coverage or $3,200 for family coverage, an increase over 2023 by $100 and $200, respectively.  SImilarly, a HDHP annual out-of-pocket expense limit (for deductibles, co-payments, and other amounts, but not premiums) were increased and now cannot exceed $8,050 for self-only coverage or $16,100 for family coverage.  These increases of $550 and $1,100, respectively, will mean that participants may have to spend more (including from their HSA savings) on coverage.