IRS Announces 2023 Contribution Limits for Health Care FSAs
On October 18, 2022, the IRS released Revenue Procedure 2022-38, which provides increased limits for health care flexible spending account (FSA) contributions and related carryover amounts of $3,050 and $610, respectively, for the 2023 plan year (up from the 2022 limits of $2,850 and $570, respectively). In addition, the limit for 2023 qualified transit and parking expenses (which represent the non-taxable limits for employer-provided commuter benefit programs), increases to $300 (up from $280 in 2022).
The following is a reference tool for employers that summarizes 2023 limits applicable to health and welfare plans that are reflected either in Revenue Procedure 2022-38 or earlier guidance. Also included are the 2023 contribution limits required by employers subject to the San Francisco Health Care Security Ordinance (SFHCSO).
| EMPLOYEE HEALTH AND WELFARE PLANS | 2022 | 2023 |
| HDHP Self-only Coverage ACA Maximum Out-of-Pocket | $8,700 | $9,100 |
| Embedded Self-Only Coverage ACA Maximum Out-of-Pocket | $8,700 | $9,100 |
| HDHP Family Coverage ACA Maximum Out-of-Pocket | $17,400 | $18,200 |
| HSA HDHP Self-only Coverage Minimum Deductible | $1,400 | $1,500 |
| HSA HDHP Family Coverage Minimum Deductible | $2,800 | $3,000 |
| HSA HDHP Self-only Coverage Maximum Out-of-Pocket | $7,050 | $7,500 |
| HSA HDHP Embedded Self-Only Coverage Maximum Out-of-Pocket | $8,700 | $9,100 |
| HSA HDHP Family Coverage Maximum Out-of-Pocket | $14,100 | $15,000 |
| HSA Self-only Coverage Maximum Contribution | $3,650 | $3,850 |
| HSA Family Coverage Maximum Contribution | $7,300 | $7,750 |
| HSA Age 55+ Catch-Up Contribution | $1,000 | $1,000 |
| Excepted Benefit HRA | $1,800 | $1,950 |
| Qualified Small Employer HRA Contribution | $5,450/$11,050 | $5,850/$11,800 |
| Healthcare Flexible Spending Account | $2,850 ($570 carryover) | 3,050 ($610 carryover) |
| Dependent Care Flexible Spending Account | $5,000 | $5,000 |
| Monthly Qualified Transportation Fringe Exclusion Limit (132(f)) | $280 (transit/parking) | $300 (transit/parking) |
| Adoption Assistance | $14,890 | $15,980 |
| Social Security Taxable Wage Base | $147,000 | $160,200 |
| ACA EMPLOYER SHARED RESPONSIBILITY | 2022 | 2023 |
| ACA Shared Responsibility Penalty– 4980H(a) | $2,750 ($229.17/mo.) | $2,880 ($240.00/mo.) |
| ACA Shared Responsibility Penalty—4980H(b) | $4,120 ($343.33/mo.) | $4,320 ($360.00/mo.) |
| ACA Affordability Percentage | 9.61% | 9.12% |
| SFHCSO EMPLOYER CONTRIBUTION REQUIREMENTS [1] | 2022 | 2023 |
| All employers with 100+ employees | $3.30/ hr. payable ($1,702.80/qtr.) | $3.40/ hr. payable ($1,754.40 qtr.) |
| Businesses with 20-99 employees
Non-Profits with 50-99 employees |
$2.20/ hr. payable ($1,135.20/qtr.) | $2.27/ hr. payable ($1,171.32 qtr.) |
| Businesses with < 20 employees
Non-Profits with <50 employees |
Exempt | Exempt |
[1] Covered employers are required to make a minimum health care expenditure for most of their employees who work at least 8 hours per week within the geographic boundaries of the City. For 2023, managerial, supervisory and confidential employees earning more than $114,141 yr. (or $54.88/hr.) are exempt (for 2022, the exemption thresholds were $109,643/yr., or $52.71/hr.)
ADDITIONAL INFORMATION
For questions regarding this Legislative Update or any other related compliance issues, please contact your Burnham Benefits Consultant or Burnham Benefits at 949‐833‐2983 or inquiries@burnhambenefits.com.
This Legislative Update was prepared by the Baldwin Regulatory Compliance Collaborative (the “BRCC”), a partnership of compliance professionals offering client support and compliance solutions for the benefit of the Baldwin Risk Partners organization, which includes: Jason Sheffield, BRP National Director of Compliance; Richard Asensio, Burnham Benefits Insurance Services; Nicole L. Fender, the Capital Group; Bill Freeman, AHT Insurance; Stephanie Hall, RBA/TBA; Caitlin Hillenbrand, AHT Insurance; Paul Van Brunt, Baldwin Krystyn Sherman Partners (BKS); and Natashia Wright, Insgroup.
Burnham Benefits and the BRCC do not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with applicable federal and state law requirements, and is based on our interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.