Federal Changes to HRA, HSA, and FSA for 2024

Blog, Compliance, Employee Benefits, Individual Insurance

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There have been federal changes to Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs) play important roles in managing healthcare expenses for both individuals and employers. These accounts offer different tax advantages and financial benefits, but it’s critical to stay updated on the rules and regulations governing them.

If you’re wondering about the federal changes for this year, then you’re in the right place. In this blog, we’ll talk about the new inflation-adjusted limits imposed by the IRS and how they might impact you.

Understanding the Federal Changes

The IRS has recently announced inflation-adjusted limits for HSAs and certain HRAs for the year 2024. In In summary, here’s what you need to know:

  • HSA contribution limits: For 2024, the contribution limits are set at $4,150 for individuals and $8,300 for families.
  • Catch-up contribution limits: Individuals aged 55 and older can make additional catch-up contributions of up to $1,000.
  • HDHP minimum deductible amount: The minimum deductible for High Deductible Health Plans (HDHPs) has been set at $3,200 for family coverage.
  • IRS maximum annual out-of-pocket cost limit: The maximum out-of-pocket costs for HDHPs, including deductibles, copayments, and coinsurance, are capped at $16,100 for family coverage.
  • Excepted benefit HRA maximum reimbursement amount: Excepted benefit HRAs can reimburse up to $2,100 annually.
  • Maximum annual employer contribution: Employers offering excepted benefit HRAs can contribute up to $2,100 per employee annually.
  • Maximum reimbursement amounts for QSEHRAs: For Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), the maximum reimbursement amounts are $6,150 for single coverage and $12,450 for family coverage.

How Will These Federal Changes Impact Individuals and Employers?

Needless to say, these federal changes have implications for both individuals and employers:

Federal Changes for Individuals

For individuals, these federal changes directly impact their healthcare planning and financial management. For example, if an individual contributes to an HSA, the revised contribution limits dictate how much they can save tax-free for medical expenses. Adjusting their contributions accordingly becomes crucial to optimize tax benefits while ensuring there are enough funds to cover healthcare costs. Similarly, changes in reimbursement amounts for FSAs or HRAs may affect how individuals’ budget for medical expenses and plan for out-of-pocket costs.

If you contribute to an HSA, you can increase your contributions to align with the new limits. It’s essential to ensure that you maximize your contributions while staying within the allowable limits.

Federal Changes for Employers

On the other hand, employers who are offering health benefits to their employees will also feel the effects of these federal changes. Compliance with updated regulations is essential to avoid penalties and maintain the integrity of benefit programs. Employers must ensure that their benefit offerings align with the new contribution and reimbursement limits, which may involve adjusting plan designs, communicating changes to employees, and updating administrative processes. Failure to comply with these regulations can of course result in financial liabilities and potential legal repercussions for them.

For instance, plan deductibles may need to increase to accommodate the higher deductible limits. Additionally, those administering QSEHRAs need to be aware of the revised maximum reimbursement amounts to effectively manage employee benefits.

Let’s Plan Ahead

Quote from Ben Feldman "Doing something, cost something, doing nothing costs something, but quite often doing nothing costs a lot more."

 It’s not too late to prepare for these changes even if we’re already in the middle of 2024. Consider taking the following steps to help you with all the necessary adjustments.

  • Conduct regular Compliance Reviews to ensure that your plans adhere to the latest regulations. It is recommended to do this at least once a year.
  • Communicate any changes to employees and update plan documents accordingly to maintain transparency and compliance.
  • Review your healthcare needs and adjust contributions to optimize benefits and minimize tax liabilities. Here’s 5 quick and simple ways to do this.
  • Seek guidance from financial or tax advisors to develop personalized strategies for maximizing the benefits of these accounts.

AUI is Here to Help!

Staying informed about and federal changes to HRA, HSA, and FSA rules and regulations is a top priority for individuals and employers. That’s why at AUI, we prioritize compliance and maximizing benefits for our clients. By adapting our strategies to ensure compliance and maximize benefits, you can effectively manage healthcare expenses this year and beyond. Contact us today to learn more about how we can optimize your healthcare benefits.

We do more than cover small businesses and individuals with the right insurance policies and benefit plans – what motivates our team is helping you save more so you can invest more in your team, family, and goals.

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