2023 Welfare Benefit Plan Contribution Limits

November 4, 2022

The IRS recently released in Revenue Procedure 2022-38 the 2023 annual contribution limits for welfare benefit plans. The updated limits for Health Savings Accounts (HSAs) were previously released in Revenue Procedure 2022-24. These limits are typically adjusted each year for inflation.

The 2023 HSA limits are $3,850 for an individual with self-only coverage and $7,750 for an individual with family coverage. Catch-up contributions for individuals age 55 or older remain $1,000. Such pre-tax contributions can only be made to an HSA that is maintained in conjunction with a high-deductible health plan.

A high-deductible plan for 2023 is defined as a plan with an annual deductible of $1,500 or more for self-only coverage or $3,000 or more for family coverage. The corresponding maximum out of pocket expenses are $7,500 and $15,000 respectively which is an increase from the 2022 amounts.

Health savings accounts continue to be a powerful tool in combating the rise in health costs. However, they have also seen a rise in utilization as a retirement planning tool given that the accounts grow tax free as opposed to typical retirement accounts that grow tax deferred. Employers should continue to evaluate their effectiveness as part of the overall health benefits strategy.

The annual contribution limit for Health Flexible Spending Accounts (FSAs) increased to $3,050 while the limit for Dependent Care FSAs remained the same at $5,000. Additionally, the carryover amount for Health FSAs increased to $610

The qualified transportation benefit limit increased to $300 per month for transit passes and qualified parking.

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