IRS Releases 2023 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

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On March 15, 2022, the President signed the Consolidated Appropriations Act, 2022 (H.R. 2471) into law (“CAA 2022”). The CAA 2022 is largely a spending bill but also includes, among other things, a much-anticipated new telemedicine safe harbor similar to that which was created under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The safe harbor allows high deductible health plans (HDHPs) to cover medical and behavioral health treatment before participants meet their deductibles (i.e., without cost sharing). The safe harbor applies from April 1, 2022, through December 31, 2022, regardless of plan year.

Out-of-Pocket Limits Applicable to Non-Grandfathered Plans
The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2023.

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage if the family out-of-pocket limit is above $9,100 (2023 plan years) or $8,700 (2022 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans). While historically CMS has renewed the transition relief for Grandmothered plans each year, it announced in March that the transition relief will remain in effect until it announces that all such coverage must come into compliance with the specified requirements.

Next Steps for Employers
As employers prepare for the 2023 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

• HSA-qualified family HDHPs cannot have an embedded individual deductible that is lower than the minimum family deductible of $3,000.
• The out-of-pocket maximum for family coverage for an HSA-qualified HDHP cannot be higher than $15,000.
• All non-grandfathered plans (whether HDHP or non-HDHP) must cap out-of-pocket spending at $9,100 for any covered person. A family plan with an out-of-pocket maximum in excess of $9,100 can satisfy this rule by embedding an individual out-of-pocket maximum in the plan that is no higher than $9,100. This means that for the 2023 plan year, an HDHP subject to the ACA out-of-pocket limit rules may have a $7,500 (self-only)/$15,000 (family) out-of-pocket limit (and be HSA-compliant) so long as there is an embedded individual out-of-pocket limit in the family tier no greater than $9,100 (so that it is also ACA-compliant).

This alert was prepared for Advanced Benefits by Stacy Barrow. Mr. Barrow is a nationally recognized expert on the Affordable Care Act. His firm, Marathas Barrow Weatherhead Lent LLP, is a premier employee benefits, executive compensation and employment law firm.