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IRS Updates HSA Contribution Limits for 2022

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What You Need to Know

  • HSA contribution limits will increase.
  • Minimum HSA deductibles will stay the same.
  • Excepted benefit HRA employer contribution limits will also hold steady.

The IRS has published a set of numbers that will shape how some types of personal health accounts work in 2022.

The agency has put new, inflation-adjusted parameters for the health savings account (HSA) program and the excepted benefit health reimbursement arrangement (HRA) program in Revenue Procedure 2021-25.

HSA contribution limits are increasing a little, and so are the amounts that HSA-compatible high-deductible health plans can expect enrollees to spend out of pocket on health care. The minimum deductibles for the high-deductible health plans will still stay the same.

The maximum annual contribution an employer can make to an employee’s excepted benefit HRA will also stay the same.

Here’s a table showing what will happen to the minimums and limits.

HSA and HRAs

Inflation-Adjusted Parameters
2020 2021 2022
HSA: Individual
Contribution Limit  $3,550  $3,600  $3,650
Minimum Deductible  $1,400  $1,400 $1,400
Annual OOP Maximum  $6,900  $ 7,000  $7,050
HSA: Family
Contribution Limit  $7,100  $7,200  $ 7,300
Minimum Deductible  $2,800  $2,800  $2,800
Annual OOP Maximum  $13,800  $14,000  $14,100
Excepted Benefit HRA
Maximum Annual Employer Contribution  $1,800  $1,800  $1,800

The HSA program is part of a federal effort to make Americans better health care shoppers, by providing pots of cash people can use to pay for their own health care services.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the law that created the HSA program, requires people to use HSAs together with high-deductible health plans.

One reason for the high-deductible health plan requirement is to give HSA users “skin in the game,” or enough exposure to what health care really costs to consider price when choosing providers.

Another reason for the requirement is to minimize the impact of the HSA program on federal tax revenue. The tax breaks that power the HSA program reduced federal income tax revenue by $8.5 billion in 2020, according to the White House Office of Management and Budget.

The excepted benefit HRA program gives employers something they had been seeking for years: a legal way to give employees cash the employees can use to buy their own health insurance.

An employee cannot use excepted benefit HRA cash to pay for ordinary individual major medical coverage. An employee can use the excepted benefit HRA cash to pay COBRA health coverage continuation premiums.

An employee also can use the cash to pay for health benefits that are “excepted from,” or exempted from, the Health Insurance Portability and Accountability Act and Affordable Care Act rules that apply to major medical insurance. The list of excepted benefits includes dental insurance, vision insurance, disability insurance and critical illness insurance.

(Photo: Allison Bell/ALM)