New HDHP and HSA Limits Published
5/1/2012 8:24 AM
Employers with high-deductible health plans (HDHPs) that make it possible for employees to open health savings accounts (HSAs) now have the information they need to prepare for 2013. The IRS on April 27 issued Revenue Procedure (Rev. Proc.) 2012-26, which contains the HSA and HDHP limits for calendar year 2013.
The HSA annual limits and the annual out-of-pocket expenses for HDHPs are higher than those the IRS set for 2012. The IRS adjusted the rates after applying the cost of living adjustment rules under Code Section 223, which governs HSAs.
The 2013 rates will be:
· - annual limit of $3,250 on contributions by/for an individual with self-only coverage under an HDHP
· - annual limit of $6,450 on contributions by/for an individual with family coverage under an HDHP
*Eligible individuals over age 55 can make an additional $1,000 HSA contribution in excess of the limit.
The definition of an HDHP will be based on the following for 2013:
· - minimum annual deductible of $1,250 for self-only coverage
· - minimum annual deductible of $2,500 for family coverage
· - maximum annual out-of-pocket expenses of $6,250 for self-only coverage
· - maximum annual out-of-pocket expenses of $12,500 for family coverage
Employers do not have to adjust any plan documents or practices in calendar year 2012 to apply these rates, as long as they have a plan whose plan year is based on the calendar year. These rates do not go into effect until 2013. This could, however, create challenges for employers that do not use a calendar year as the basis of their plan year and instead have a plan year that spans calendar years.
The early release of the 2013 HSA and HDHP rates, however, gives employers more time to adjust their documents, plans and policies as they prepare for 2013. The IRS issues the rates early to allow employers and plan administrators time to apply the new rates when they prepare their plan documents and materials for the next year.
Finding out More
Rev. Proc. 2012-26 will be published in Internal Revenue Bulletin 2012-20 on May 14, 2012. For more information regarding HSA limits and other compliance issues, feel free to contact the Compliance Department at Employee Benefits Corporation at 800-346-2126.