IRS Publishes Calendar Year 2022 HSA Contribution Limits

The limit for individuals with self-only coverage will increase $50, and the limit for those with family coverage will increase $100.

The IRS has published Revenue Procedure (Rev. Proc.) 2021-25, setting the 2022 inflation-adjusted amounts for contributions to health savings accounts (HSAs), as determined under Section 223 of the Internal Revenue Code (IRC).

For calendar year 2022, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan (HDHP) is $3,650, up $50 from this year’s limit. The annual limitation on deductions for an individual with family coverage under an HDHP is $7,300, an increase of $100 from the 2021 limit.

The new Rev. Proc. defines an HDHP for calendar year 2022 as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and for which annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) do not exceed $7,050 for self-only coverage or $14,100 for family coverage.

HSAs can only be offered in connection with an HDHP, but lawmakers and advocacy groups are making efforts to change this.

HSAs have been touted as an optimal vehicle for employees to accumulate savings to cover health care costs in retirement, but not many employees are using the accounts that way. A survey released last year from Further, a national health savings administrator, found 65% of consumers report leveraging their HSA as a spending resource, with 23% stating they use their account equally for saving and spending.

PLANSPONSOR recently conducted a survey of employers and found that among those who offer HSAs, none position them exclusively as a strategy to save for health care expenses in retirement. Nearly half (48%) position them as mainly a short-term savings tool that doubles as a retirement savings strategy, and one-third (32%) reported that they market their HSAs to employees as equal parts retirement savings strategy and short-term health savings tool.

There are different needs competing for employees’ savings, but employers that want to promote HSAs as retirement savings vehicles have several ways to do so.

Employers that want to offer HSAs to their employees can find information about providers in PLANSPONSOR’s 2021 Health Savings Account Survey.