Call it a case of benefits compliance whiplash. For the second time this year, the IRS has updated rules covering how Health Savings Accounts (HSAs) should be managed.
What Are HSAs?
Individuals use these savings accounts to pay for certain qualifying medical expenses. That said, federal rules limit how much employees can contribute to an HSA each year. Why? These accounts are tax advantaged, meaning that contributions to them can be made on a pre-tax basis. For most HSA account holders, these contributions are handled automatically via payroll deductions.
Lastly, HSAs are divided into three distinct categories, each with their own maximums: single accounts, family accounts, and those belonging to individuals over 55 years old.
Each year, the IRS considers whether to update HSA maximums to account for inflation. In March, it did just that, lowering the annual maximum for Family HSAs by $50.
The IRS appears to have had a sudden change of heart. On April 27, the IRS announced it was instead increasing the maximum contribution for Family HSAs from $6,850 back to $6,900. For employees older than 55, the maximum pre-tax contribution will increase from $7,850 up to $7,900.
If you work with a third party benefits or payroll administrator, ensure that their system is updated to reflect the change.
HSAs represent just one benefit that employees have increasingly come to expect. Supplementary benefits like these, when coupled with robust health, dental, and vision coverage, can make all the difference in boosting recruitment and retention.
Read our Complete Guide to Employee Benefits and learn how you can offer your people quality care without breaking the bank.