Departments Update Out-of-Pocket Maximums and HSA/HDHP Amounts for 2023

IRS and HHS annual regulatory updates with inflation adjusted deductibles, out-of-pocket maximums, and HSA amounts.

icon_featured_hand

May 13, 2022

On April 29, 2022, the Internal Revenue Service (IRS) issued Revenue Procedure 2022-24, which provides inflation-adjusted amounts for health savings accounts (HSAs) paired with high-deductible health plans (HDHPs). The previous day, the Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS) issued the Notice of Benefit and Payment Parameters for 2023 Final Rule, along with an accompanying Press Release and Fact Sheet. This annual notice details regulatory updates for public marketplaces and other Affordable Care Act (ACA) requirements, including out-of-pocket maximums for all non-HSA/HDHP group health plans, on April 28, 2022. We summarize these updates, and a few other provisions of the Notice that are related to employer-sponsored plans, below.

2023 Contributions and Deductibles for HSA/HDHP Arrangements

Effective for 2023, the annual contribution limits and minimum annual deductibles are as follows (with information for previous years):

HSAs – Maximum Annual Contribution
  Self-Only Family
2023 $3,850
(+$200)
$7,750
(+$450)
2022 $3,650 $7,300
2021 $3,600 $7,200
2020 $3,550 $7,100
2019 $3,500 $7,000
2018 $3,450 $6,900
2017 $3,400 $6,750
2016 $3,350 $6,650
2015 $3,350 $6,650
2014 $3,300 $6,550
HDHPs – Minimum Annual Deductible
  Self-Only Family
2023 $1,500
(+$100)
$3,000
(+$200)
2022 $1,400 $2,800
2021 $1,400 $2,800
2020 $1,400 $2,800
2019 $1,350 $2,700
2018 $1,350 $2,700
2017 $1,300 $2,600
2016 $1,300 $2,600
2015 $1,300 $2,600
2014 $1,250 $2,500

For 2023, the annual limit on HSA catch-up contributions age 55 and older remains $1,000. This amount is fixed by statute and is not subject to cost-of-living adjustments.

Out-of-Pocket Maximums

The Notice of Benefit and Payment Parameters and IRS Revenue Procedure 2022-24 establish the following out-of-pocket maximums for 2023 (with information for previous years):

Out-of-Pocket Maximums by Year
 HSA/HDHPs All Other Group Health Plans 
  Self-Only Family Self-Only Family
2023 $7,500
(+$450)
$15,000
(+$900)
$9,100*
(+$400)
 $18,200
(+$800)
2022 $7,050 $14,100 $8,700*
$17,400
2021 $7,000 $14,000 $8,550* $17,100
2020 $6,900 $13,800 $8,150* $16,300
2019 $6,750 $13,500 $7,900* $15,800
2018 $6,650 $13,300 $7,350* $14,700
2017 $6,550 $13,300 $7,150* $14,300
2016 $6,550 $13,100 $6,850* $13,700
2015 $6,450 $12,900 $6,600 $13,200
2014 $6,350 $12,700 $6,350 $12,700

* Embed self-only out-of-pocket maximum for family coverage

Excepted Benefits Health Reimbursement Arrangements (HRAs)

Revenue Procedure 2022-24 also includes the cost-of-living adjusted maximum annual amount that may be made newly available for excepted benefits HRAs. Effective for plan years beginning in 2023, the maximum annual amount that employers may contribute is $1,950 (+$150 from 2022).

Section 1557 Nondiscrimination Provisions

In addition to confirming the maximum annual cost-sharing limits for 2023, the Final Notice of Benefit and Payment parameters reaffirmed HHS’ commitment to enforcing nondiscrimination against, and removing barriers to care for, LGBTQ+ people. HHS declined, however, to incorporate provisions that would have reinstated rules explicitly barring discrimination on the basis of sexual orientation and gender identity that were included in the proposed version of the 2023 payment notice.

Federal rules currently prohibit discrimination on a range of bases in benefit design and marketing practices, including those by plans, states, and marketplaces. These rules included prohibition on the basis of sexual orientation and gender identity until a 2020 rule eliminated these protections under Section 1557, which is the ACA’s primary nondiscrimination statute.

The proposed 2023 payment notice would have restored these references to gender identity and sexual orientation. HHS cited a January 2021 Executive Order by President Biden and a statement by the HHS Office for Civil Rights (OCR), who has enforcement authority over Section 1557, that they will interpret and enforce Section 1557 in a manner consistent with the U.S. Supreme Court’s decision in Bostock v. Clayton County. The Court held in that case that Title VII’s ban on sex discrimination bans workplace discrimination based on gender identity and sexual orientation.

HHS states that they opted to remove these provisions between the proposed and the final 2023 Notice of Benefit and Payment Parameters as HHS believes these changes should be adopted in a separate Section 1557-focused rule that broadly addresses issues related to sex discrimination. HHS notes in the accompanying Fact Sheet that they are in the process of developing these separate Section 1557 regulations, confirming they will continue to interpret and enforce Section 1557 nondiscrimination to include sexual orientation and gender identity.

Medical Loss Ratio Requirements

The Notice of Benefit and Payment Parameters confirms that HHS and CMS are finalizing rules clarifying how insurers calculate their medical loss ratio requirements (MLRs), effective for the 2021 MLR reporting year (reports due July 31, 2022). The final changes in the Notice specify how indirect quality improvement activity (QIA) expenses that may be included for MLR reporting and rebate calculation must only be expenses that directly relate to activities that improve health care quality.

Under the Public Health Service Act, as amended by the ACA, insurers must spend a certain percentage of their premium revenue (80% in the in the individual and small group markets, 85% in the large group market) on health care claims or health care quality improvement expenses. If insurers fail to meet the required MLR percentage, they must rebate the difference to participants, which can take the form of a premium credit or a check payment to individual enrollees. In the large group market, savings can be shared between employer and employee.

To allow insurers time to comply with the changes, HHS will exercise enforcement discretion for an additional year, meaning HHS will not penalize insurers who make good faith efforts to comply and report QIAs until the 2022 MLR reporting year (reports due July 31, 2023).

Next Steps

  • Employer plan sponsors should consider these inflation-adjusted limits when planning for the 2023 plan year.
  • Employer plan sponsors that offer fully-insured group health plans should coordinate with their vendor partners to confirm that they are aware of the changes to the MLR requirements, as well as the effective date the 2021 reporting year and the additional year of enforcement discretion.
  • Section 1557 nondiscrimination has been an area with a lot of regulatory activity under the past three presidential administrations, as well as various legal challenges. Employer plan sponsors should be aware of HHS’ current regulatory interpretation and enforcement perspective. Business Group on Health will continue to monitor developments related to the Section 1557 regulations currently being developed and will keep members updated once these new proposed rules are released.

Resources

If you have questions, comments, or concerns about these or other regulatory and compliance issues, please contact us.

We provide this material for informational purposes only; it is not a substitute for legal advice.

More Topics

Articles & Guides icon_right_chevron_dark Culture and Strategy icon_right_chevron_dark Physical Health icon_right_chevron_dark
More in Policy & Advocacy