Employers with high-deductible health plans (HDHPs) that make it possible for employees to open health savings accounts (HSAs) have plenty of lead time to prepare for 2013. The IRS on April 27 issued Revenue Procedure (Rev. Proc.) 2012-26, which contains the HSA and HDHP limits for calendar year 2013.
The HSA annual limits and the annual out-of-pocket expenses for HDHPs are higher than those the IRS set for 2012; the HDHP annual deductibles for 2012 are the same as those the IRS set for 2011. The IRS adjusted the rates after applying the cost of living adjustment rules under Code Section 223, which governs HSAs.
The 2013 rates will be as follows.
- annual limit of $3,250 on deductions for an individual with self-only coverage under an HDHP
- annual limit of $6,450 on deductions for an individual with family coverage under an HDHP
The definition of an HDHP will be based on the following for 2013:
- annual deductible of $1,250 for self-only coverage
- annual deductible of $2,500 for family coverage
- annual out-of-pocket expenses of $6,250 for self-only coverage
- annual out-of-pocket expenses of $12,500 for family coverage
Employers do not have to adjust any plan documents or practices in calendar year 2012 to apply these rates, as long as they have a plan whose plan year is based on the calendar year. These rates do not go into effect until 2013. This could, however, create challenges for employers that do not use a calendar year as the basis of their plan year and instead have a plan year that spans calendar years.
The early release of the 2013 HSA and HDHP rates, however, gives employers plenty of time to adjust their documents, plans and policies as they prepare for 2013. The IRS issues the rates early to allow employers and plan administrators time to apply the new rates when they prepare their plan documents and materials for the next year.
Finding out More
Rev. Proc. 2012-26 will be published in Internal Revenue Bulletin 2012-20 on May 14, 2012.
Additional information about Rev. Proc. 2012-26 is available by contacting its principal author, Bill Ruane of the IRS Office of Associate Chief Counsel (Income Tax & Accounting at (202) 622-4920. Additional information regarding Section 223 and HSAs is available by contacting Leslie Paul at (202) 622-6080.