May 2022

HSA/HDHP Limits Increase for 2023

 

May is Mental Health Awareness Month 2022

 

Proposed Change to Affordability for Family Coverage

 

IRS Suspends Notices to Delinquent Filers of Some Returns

 

HSA/HDHP Limits Increase for 2023

On April 29, 2022, the IRS released Revenue Procedure 2022-24 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2023. The IRS is required to publish these limits by June 1 of each year.

These limits include:

  • The maximum HSA contribution limit;
  • The minimum deductible amount for HDHPs; and
  • The maximum out-of-pocket expense limit for HDHPs.

These limits vary based on whether an individual has self-only or family coverage under an HDHP.

Eligible individuals with self-only HDHP coverage will be able to contribute $3,850 to their HSAs for 2023, up from $3,650 for 2022. Eligible individuals with family HDHP coverage will be able to contribute $7,750 to their HSAs for 2023, up from $7,300 for 2022. Individuals age 55 or older may make an additional $1,000 “catch-up” contribution to their HSAs.

The minimum deductible amount for HDHPs increases to $1,500 for self-only coverage and $3,000 for family coverage for 2023 (up from $1,400 for self-only coverage and $2,800 for family coverage for 2022). The HDHP maximum out-of-pocket expense limit increases to $7,500 for self-only coverage and $15,000 for family coverage for 2023 (up from $7,050 for self-only coverage and $14,100 for family coverage for 2022).

Action Steps

Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2023. Also, employers that allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.

HSA/HDHP Limits

The following chart shows the HSA and HDHP limits for 2023 as compared to 2022. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.

Type of Limit 20222023Change
HSA Contribution LimitSelf-only$3,650$3,850Up $200
HSA Contribution LimitFamily$7,300$7,750Up $450
HSA Catch-up Contributions (not subject to adjustment for inflation)Age 55 or older$1,000$1,000No change
HDHP Minimum DeductibleSelf-only$1,400$1,500Up $100
HDHP Minimum DeductibleFamily$2,800$3,000Up $200
HDHP Maximum Out-of-pocket Expense Limit
(deductibles, copayments and other amounts, but not premiums)
Self-only$7,050$7,500Up $450
HDHP Maximum Out-of-pocket Expense Limit
(deductibles, copayments and other amounts, but not premiums)
Family$14,100$15,000Up $900
This chart is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

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May is Mental Health Awareness Month 2022

 

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Proposed Change to Affordability for Family Coverage
On April 5, 2022, the IRS issued a proposed rule that would change existing rules for premium tax credit (PTC) eligibility. The PTC is available to eligible individuals who purchase health coverage through the Exchange. Individuals who have access to affordable, minimum value employer coverage are not eligible for the PTC.

Overview of the Proposed Rule

Currently, the affordability of employer coverage for family members is determined based on the lowest-cost self-only coverage available to the employee. The cost of family coverage is not taken into account. These rules apply for determining eligibility for the PTC and for purposes of the employer shared responsibility rules.

The proposed rule would provide that an employer-sponsored plan is affordable for family members if the portion of the premium the employee must pay for family coverage does not exceed 9.5% (as adjusted) of their household income. Family coverage includes all employer plans that cover any individuals related to an employee. The proposal would also add a minimum value rule for family members.

Impact of the Proposed Rule

If this rule is finalized, the change would likely mean more individuals will be newly eligible for the PTC for coverage purchased through the Exchange. The proposal would not affect affordability for employees. Thus, an employee’s family member may have an offer of unaffordable employer coverage, even if the employee has an affordable offer of self-only coverage.

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IRS Suspends Notices to Delinquent Filers of Some Returns

On March 22, 2022, the IRS announced it will temporarily stop sending written notices to certain entities that fall behind on filing obligations related to Forms 5500, 990 and others. The IRS usually mails these notices to tax-exempt or governmental entities in case of a delinquent return. The suspension does not relieve entities of any filing deadlines or obligations.

The IRS is currently experiencing a backlog of several million unprocessed returns due to the COVID-19 pandemic. This backlog involves returns filed by both individuals and entities. According to the IRS, the suspension will help avoid confusion when a filing is still in process.

Duration of Notice Suspension

The IRS will continue to assess its inventory of pending returns to determine when to resume mailing the suspended notices.

Meanwhile, some taxpayers and tax professionals may still receive the notices over the next several weeks.

Affected Notices

The suspension applies to these notices:

  • Reminder Notice About Your Form 5500-EZ or 5500-SF Filing Requirement
  • Form 940 Not Required—Federal, State and Local Government Agencies
  • First Taxpayer Delinquency Investigation Notice—Forms 990/990EZ/990N, 990PF, 990T, 5227, 1120-POL and 990/990EZ
  • First Delinquency Notice—Forms 5500 and 5500-SF
  • Second Delinquency Notice—Form 5500

Entities affected by the suspension should ensure their procedures for timely filing returns do not rely on any of these notices.

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