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October 17, 2022

2023 Benefit Guidelines for Employees

by admin

It’s that time of year again — time for businesses around the nation to start their open enrollment periods for benefits. As the world continues to change after the pandemic, healthcare employers need to consider how they will keep up with the new adjustments in benefit contribution limits. Thankfully, there are some clear 2023 benefit guidelines that can help you offer the best options for your employees. 

Both employers and employees rank healthcare as the most important benefit an employer can offer, followed by retirement and leave benefits. So the benefits you offer can make all the difference in employee recruitment and retention in today’s tight labor market. 

In fact, according to the Society for Human Resource Management‘s Chief Knowledge Officer Alex Alonso, Ph.D., SHRM-SCP, “Workers now have more options for where and when they will work, and these two factors together create a challenging talent landscape for organizations everywhere. These benefits can play an instrumental role in this talent competition and, in some cases, may determine success or failure.”

Leveraging your benefits package allows you to offer the most enticing option to prospective employees. But you also have to ensure that you comply with updated federal limits — all while keeping benefits from negatively impacting your budget. 

It’s a lot to handle. Start from the beginning and look at the types of benefit options available this year. From there, consider changes in benefit limits for the upcoming year.


2023 Employee Benefits Options and Limits

Many businesses are expanding their benefits to include more than just the standard health, vision, and dental coverage through traditional insurance companies. As employees become more concerned about their health after the pandemic, many health plan administrators have added more flexible options through savings accounts, including:

  • HSAs (Health Savings Accounts)
  • FSAs (Flexible Spending Accounts)
  • HRAs (Health Reimbursement Accounts)

These accounts allow employees to pay for eligible medical expenses with pre-taxed money or be reimbursed for those expenses, making healthcare more accessible and affordable and increasing employees’ desire to stay with their current jobs.

Employers who contribute to these accounts must follow government guidelines to ensure compliance with their contribution amounts. IRS announced the contribution limits for 2023 health savings account plans in April 2022, giving employers plenty of time to plan for open enrollment season.

What Are HSA Contribution Limits for 2023?

There will be a significant increase in health savings account (HSA) employer and employee contribution limits for 2023.

The annual inflation-adjusted HSA contribution limit for self-only coverage will be $3,850, an increase of $200 from 2022. The contribution limit for families — designated for married couples filing jointly — will be $7,750, an increase of $450 from the 2022 limit. These represent an average 5.5% increase over this year.

HSA catch-up contributions for employees age 55 or older will remain at $1,000.

If account holders exceed the contribution limit, they will be subject to a yearly 6% excise penalty tax on the excess amount unless they withdraw it from the HSA before the tax deadline.

What Are HDHP Deductible Limits for 2023

There will also be increases in high-deductible health plan (HDHP) minimum deductibles and maximum out-of-pocket amounts. 

The HDHP minimum annual deductible in 2023 will be $1,500 for self-coverage and $3,000 for family coverage — an increase of $100 and $200 respectively. 

Maximum out-of-pocket amounts — which include co-payments, coinsurance, and deductibles but not premiums — will increase by $450 from $7,050 to $7,500 in 2023. Maximum amounts for family health coverage will rise from $14,100 in 2022 to $15,000 in 2023 — an increase of $900.

It’s important to note that there are two sets of limits on HDHP’s out-of-pocket expenses. The figures above show the IRS’s established limits for HSA plans with high deductibles.

The amounts differ for non-HSA Affordable Care Act (ACA)-compliant plans, which are based on annual cost-sharing or out-of-pocket limits established by the Department of Health and Human Services (HHS). The maximum out-of-pocket limits for ACA-compliant plans are significantly higher than the IRS’s limits.

ACA-compliant plans have a maximum out-of-pocket limit of $9,100 for self-only and $18,200 for family plans. They still see a significant increase in price compared to 2022, which were $8,750 and $17,400 respectively.

These two sets of limits are often confusing for plan administrators and can cause issues in the planning stage. You can simplify and automate the process through technology that helps you manage your HDHP benefits. 

Using robust payroll and HCM software like empeon allows you to track benefits and ensure auto compliance through automated ACA auditing, support, and annual IRS reporting.

What Is the Maximum FSA Contribution in 2023?

2023 annual maximums for flexible savings account (FSA) plans were also announced. 

Health FSA plans will have a yearly maximum of $2,850. Health FSA carryovers will have a maximum of $570.

Dependent Care FSA plans will have an annual maximum of $5,000 for employees who are single or married filing jointly and $2,500 for employees who are married filing separately. 

What Is the Maximum EBHRA Contribution for 2023?

The IRS also raised the maximum amount employers can contribute to an excepted benefit reimbursement arrangement (EBHRA) for 2023. Maximum contribution limits will increase by $150 from $1,800 in 2022 to $1,950 in 2023. 

Expected benefit health reimbursement arrangements are not covered by your primary group plan, so they only pay for dental or vision coverage or other benefits exempt from the ACA.

You Can Manage Healthcare Benefits With Ease

There have been significant changes to benefit options and limits for the year 2023. Limits for HSA, HDHP, FSA, and HRA plans have been considerately increased to account for inflation following the COVID-19 pandemic. Remaining compliant with laws while offering your employees the best benefits options possible can be daunting. Thankfully, there’s an easy solution for you.

empeon is a comprehensive payroll and HCM software that handles all employee recruiting and management steps — including tracking benefits — and ensures compliance. Book a demo today to see how empeon can help you manage your business.

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