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A summary of the articles included in the June 2023 edition:
- HSA Investment Menu Design Trends
- IRS Gives Big Boost to HSA, HDHP Limits in 2024
- How Much a 65-Year-Old Retiring in 2023 Needs to Cover Healthcare Costs
- Working Past 65? Remember, Medicare and HSAs Don’t Mix
- Missed Opportunities
- The Healthcare Plan Most People Should Buy—and Why They Don’t
HSA Investment Menu Design Trends
Devenir recently published a white paper sharing some of our views on HSA investment menu design. As a follow up to that piece, we thought it would be interesting to compare past and present HSA investment menus and see if there are any noticeable trends taking place on an industry-wide level. We looked at provider fund lineups as of 12/31/2022 and then went back 5 and 10 years for comparison. This post takes a look at some of the things that stood out to us.
IRS Gives Big Boost to HSA, HDHP Limits in 2024
Thanks in part to persistent high inflation, employees will be able to sock away a lot more money in their health savings accounts (HSAs) next year.
Annual HSA contribution limits for 2024 are increasing in one of the biggest jumps in recent years, the IRS announced May 16: The annual limit on HSA contributions for self-only coverage will be $4,150, a 7.8 percent increase from the $3,850 limit in 2023. For family coverage, the HSA contribution limit jumps to $8,300, up 7.1 percent from $7,750 in 2023.
Participants 55 and older can contribute an extra $1,000 to their HSAs. This amount will remain unchanged.
Meanwhile, for 2024, a high-deductible health plan (HDHP) must have a deductible of at least $1,600 for self-only coverage, up from $1,500 in 2023, or $3,200 for family coverage, up from $3,000, the IRS noted. Annual out-of-pocket expense maximums (deductibles, co-payments and other amounts, but not premiums) cannot exceed $8,050 for self-only coverage in 2024, up from $7,500 in 2023, or $16,100 for family coverage, up from $15,000.
How Much a 65-Year-Old Retiring in 2023 Needs to Cover Healthcare Costs
Those leaving the workforce this year might be interested in new findings about total healthcare costs to expect through retirement—and might want to ramp up those health savings account contributions.
A healthy 65-year-old male retiree with an MAPD plan will spend $134,000 for healthcare in his remaining lifetime (equating to $90,000 of savings in today’s dollars), down from $137,000 in 2022. A 65-year-old female retiree with the same coverage will spend approximately $155,000 on healthcare expenses over the course of her lifetime ($100,000 in savings today), down from $158,000 in 2022.
That’s according to the latest projections released this week in the 2023 Milliman Retiree Health Cost Index, which projects the total premiums and out-of-pocket expenses a healthy 65-year-old can expect to spend on medical and prescription drug costs in retirement.
Working Past 65? Remember, Medicare and HSAs Don’t Mix
In today’s economy, it’s common for clients to work well past age 65. Although those clients become eligible for Medicare once they hit 65, there are potential complications that must be addressed to prevent unpleasant surprises.
One of those complications arises when a client continues funding their health savings account to reap tax benefits after becoming eligible for Medicare. The rules governing the post-65 interaction between Medicare and HSAs can be complicated.
It’s important for clients to understand these rules before signing up for Medicare or claiming Social Security, so that they know the potential implications with respect to their tax-preferred HSAs in retirement.
Missed Opportunities
Do employees get the most out of their health savings accounts? Adam Leive, health economist and assistant professor of public policy at the University of California, Berkeley, delved into this subject with his study “Health Insurance Design Meets Saving Incentives: Consumer Responses to Complex Contracts,” published in the American Economic Journal: Applied Economics 2022. PLANADVISER Managing Editor Judy Faust Hartnett asked him about his findings.
The Healthcare Plan Most People Should Buy—and Why They Don’t
Every fall, during open-enrollment period, over 100 million families can choose a health plan. Anyone who receives health insurance through their employer, Medicare, Veterans Affairs, the exchanges—including members of Congress, CEOs, teachers—is invited to participate in this national ritual.
The decision, which has enormous implications for our health and finances, is horrendously complex. And we are universally terrible at it.
People choose plans that don’t fit their situation based on bad assumptions and predictions, or they don’t choose at all, blindly staying with what they have done in the past. No matter what the mistake, they end up paying a lot more than they should, potentially costing themselves thousands of unnecessary dollars a year. In the end, in fact, for most people one simple type of plan makes the most sense, with some important caveats.