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IRS Releases 2023 ACA Affordability Percentage, HSA and HRA Limits

With 2023 approaching fast, the IRS has begun to release some of next year’s indexing adjustments and benefit limits for health and welfare plans.

For employers, one of the most-watched adjustments is the required contribution percentage used to determine whether employer-sponsored health coverage is considered affordable under the Affordable Care Act (ACA). The IRS recently decreased the affordability baseline from 9.61% in 2022 to 9.12% in 2023.

As a reminder, Applicable Large Employers (ALEs) subject to the ACA employer mandate have to offer affordable, minimum value coverage to their ACA full-time employees. For 2022, this means that a job-based health plan’s employee-only coverage needs to cost 9.12% or less of the employee’s household income to be considered affordable. The cost is the amount the employee pays for the insurance, not the plan’s total premium.

Earlier this year the IRS released several 2023 indexing adjustments and benefit limits for health and welfare plans, including 2023 HSA contribution limits, minimum annual HDHP deductibles, plan out-of-pockets maximums for HSA eligibility, and employer contributions to excepted benefit HRAs.

2022 2023
HSA Contribution Limit – Single $3,650 $3,850
HSA Contribution Limit – Family $7,300 $7,750
HSA Contribution Limit – 55+ Catch-Up Contribution $1,000 $1,000
Minimum HDHP Deductible – Single $1,400 $1,500
Minimum HDHP Deductible – Family $2,800 $3,000
Plan Out-of-Pocket Maximum for HSA Eligibility – Single $7,050 $7,500
Plan Out-of-Pocket Maximum for HSA Eligibility – Family $14,100 $15,000
Maximum amount made newly available for excepted benefit HRA $1,800 $1,950

We hope the information given thus far is helpful, but there is still a lot of information coming as employers plan for 2023.

To learn more about recent legislation impacting employer-sponsored benefits including HSA's, check out the recent blog post: Will the Inflation Reduction Act Impact Your Health Plan?

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