If it seems like everything in your shopping cart has increased in price over the past few months, there’s a reason. The United States’ current consumer price index (CPI)— a measure of inflation — is at its highest level in almost forty years.
Consumers are certainly feeling the financial pinch. Gasoline reached an all-time high of $4.33 in June and is still hovering around $3.55 per gallon. The overall cost of groceries has increased 13.5 percent compared to a year ago, with staples like eggs about $3.40 per dozen and chicken prices jumping nearly 17 percent.
Even food for Fido and Fluffy now costs more. Petflation — yes, it’s a real thing — is up 8.1 percent.
Fortunately for individuals with flexible spending accounts (FSAs), health savings accounts (HSAs) and health reimbursement arrangements (HRAs), the contribution limits for these programs are also increasing. Read on to find out all the details.
Flexible Spending Account Updates
Although the Internal Revenue Service (IRS) must have taken inflation into account for next year’s flexible spending account (FSA) contribution limits. The annual limit typically only increases by about $50 or $100 from year to year, but for 2023 it’s up roughly seven percent to $3,050. That’s $200 more than the 2022 cap of $2,850 and 2021’s $2,750 amount. If your spouse has a separate FSA under another employer plan, they can also make a maximum contribution.
Limited-purpose FSAs will also see changes in 2023 — but dependent care accounts won’t. Individuals can contribute up to $3,050 to their LP-FSA. For DC-FSAs, the maximum annual contribution limit remains $5,000 per household for single taxpayers and married couples filing jointly. It’s $2,500 for married individuals filing separately.
Another difference from the 2022 FSA rules? The maximum carryover amount. For workers fortunate enough to have employers who allow them to carry over FSA funds into 2023, the limit is $610, up from $570 in 2022.
Shifts for Health Savings Accounts
As with FSAs, the IRS sets an annual maximum that can be contributed to an HSA. The 2023 limit increased from $3,650 to $3,850 for self-only coverage and from $7,300 to $7,750 for family coverage.
A couple other changes for HSAs in 2023? The minimum deductible for qualifying health plans increased by $100 to $1,500 for self-only coverage and by $200 to $3,000 for family coverage. Similarly, OOP maximums, which include expenditures for deductibles, co-payments and other amounts — but not premiums — rose by $450 to $7,500 for self-only coverage and $900 to $15,000 for family coverage.
What didn’t change is the ability of individuals age 55 and older who have an HSA to contribute an additional $1,000 annually. Commonly referred to as a catch-up contribution, the overall limit is reduced by the amount of any income-excluded contributions made by the individual’s employer. Married couples possessing HSA-eligible family coverage willshare one family HSA contribution limit of $7,750 in 2023.
Changes to Health Reimbursement Accounts
Of the three programs, HRAs have the fewest number of changes for calendar year 2023. However, this is the first chance the HRA limit has increased since the program was introduced in 2020.
The 2023 excepted-benefit HRA maximum contribution amount is $1,950, up from $1,800 in 2022. The 2023 maximum amount of payments and reimbursements under QSEHRAs —short for Qualified Small Employer Health Reimbursement Arrangements — is $5,850 for self-only coverage and $11,800 for family coverage. QSEHRA self-coverage was $5,450 in 2022, and family coverage was $11,050.
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