2023 Contribution Limits for FSAs, HSAs, and HRAs: What You Need to Know
The Internal Revenue Service (IRS) announced earlier this year that the contribution limits for flexible spending accounts (FSAs), health savings accounts (HSAs), and health reimbursement arrangements (HRAs) have had a large increase for the tax year 2023. Here is a summary of the changes:
Flexible Spending Account (FSA): The contribution limit for FSAs remains unchanged at $3,050 for 2023, up from $2,850 in 2022.
Health Savings Account (HSA): The contribution limit for HSAs will increase to $3,850 for individual coverage and $7,750 for family coverage in 2023.
Health Reimbursement Arrangement (HRA): The contribution limit for HRA’s have increased to $1,950, up from $1,800 in 2022. HRAs are employer-funded accounts that can be used to reimburse employees for out-of-pocket medical expenses.
Overall, the contribution limits for FSAs, HSAs, and HRAs have remained relatively stable over the past few years, with only slight adjustments to account for inflation. However this year, we have seen larger increases than we’ve seen in the past, and a change in the EBHRAs since they were introduced in 2020.
It is important for employees to be aware of these limits as it is an important piece in the puzzle of your personal budget. Employers should also be aware of these limits when designing their benefit plans to ensure compliance with IRS regulations.
What happens to your unused FSA or HSA funds in 2023?
There are many reasons why you can be at risk of losing your FSA funds. In the event of changing jobs, benefit plan providers, quitting, or termination, if you have FSA Funds leftover you’ll likely lose access to those funds.
Some employers allow for reimbursements for expenses made prior to termination. This was due to a new IRS rule that was passed during the Pandemic, to help with the fast changing labor environment. Employers will likely not offer this option for you in the future, as leftover funds typically benefit the employer and not the employees.
If you have an HSA, please note that you do not have any deadline to spend money on your funds in your HSA account. If you do change jobs, benefit plans, quit, or are terminated, that may impact your ability to continue contributing to your account as eligibility to contribute is tied to having an HDHP insurance plan.