IRS Issues 2022 Inflation Adjusted Amounts for Health-Related Arrangements

(Parker Tax Publishing May 2021)

The IRS issued the 2022 inflation adjusted amounts for health savings accounts as determined under Code Sec. 223. The IRS also issued the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements provided under Reg. Sec. 54.9831-1(c)(3)(viii). Rev. Proc. 2021-25.

Background

Within limits, an eligible individual can deduct the amount he or she contributes to a health savings account (HSA) in computing adjusted gross income on Form 1040. The limits on the amount that may be contributed are announced each year and are adjusted for inflation. In addition, to be an eligible individual for a month, an individual must be covered under a high deductible health plan (HDHP) on the first day of that month. Generally, an HDHP is a health plan that satisfies certain requirements with respect to deductibles and out-of-pocket expenses. The out-of-pocket expense limitation is announced each year and is also adjusted for inflation. On May 10, 2021, the IRS issued Rev. Proc. 2021-25, which provides the inflation-adjusted amount for 2022.

HSA Inflation-Adjusted Items

For calendar year 2022, the annual limitation on deductions under Code Sec. 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,650. For calendar year 2022, the annual limitation on deductions under Code Sec. 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,300.

For calendar year 2022, a "high deductible health plan" is defined under Code Sec. 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,050 for self-only coverage or $14,100 for family coverage.

HRA Inflation-Adjusted Amount

For plan years beginning in 2022, the maximum amount that may be made newly available for the plan year for an excepted benefit HRA under Reg. Sec. 54.9831-1(c)(3)(viii) is $1,800.

For a discussion of heath savings accounts, see Parker Tax ¶81,100. For a discussion of health reimbursement arrangements and excepted benefit HRAs, see Parker Tax ¶120,125 and ¶120,134, respectively.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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