HSA deductibles to increase in 2024: What independent healthcare practices need to know

Many Americans depend on Health Savings Accounts (HSAs) for flexible, tax-advantaged ways to save for their healthcare expenses. An HSA is a personal savings account that allows account holders to set aside money before being taxed at the federal level and used later to pay for eligible healthcare expenses.

The Internal Revenue Service (IRS) recently released a statement announcing increases in minimum deductibles for HSAs. Although HSAs are associated with High Deductible Health Plans, their minimum deductibles have not increased like most other health plans from 2013 to 2021. More significant adjustments began in 2021, and the adjustment coming in 2024 will continue to bring HSAs in line with broader inflation-driven costs.

The new minimum deductibles will be $1,600 for employee-only coverage and $3,200 for family coverage. This adjustment will likely affect current enrollees in these health plans and cause an increase in out-of-pocket healthcare costs for many. Independent healthcare practices seeking to meet the needs of their patients will benefit from understanding the reasons behind this possible increase.

Following the IRS announcement, examining the coming changes in minimum deductibles more closely is necessary. According to data from 2021, a significant portion of individuals with HSA-eligible health plans currently have deductibles below what will be the new minimum in 2024. Roughly 24% of those with employee-only coverage and 31% of those with family coverage are estimated to have lower deductibles than the soon-to-be new minimums. This data shows that a large portion of enrollees will find themselves facing higher deductibles next year.

An analysis of trends in past years shows that many of these enrollees have already seen an increase in their deductibles. For example, the minimum threshold rose from $1,400 for employee-only coverage and $2,800 for family coverage in 2021 to $1,500 and $3,000, respectively, in 2022. Yet, the majority of enrollees were already in plans with deductibles meeting or exceeding these values.

A key factor influencing the increase in deductibles is the IRS's policy of automatically adjusting minimum deductible levels to keep pace with inflation. The historically high inflation in recent years directly contributes to higher healthcare costs. Deductible adjustments are necessary to maintain the financial viability of plans such as HSAs. Regardless of the cause, these regular adjustments tend to steadily increase out-of-pocket healthcare expenses for many enrollees.

There are several strategies independent practices can implement to help patients manage their healthcare expenses when faced with rising deductibles. Advising patients to consider increases in HSA contributions is a valuable starting point. Enrollees can use these contributions to cover higher out-of-pocket costs and access tax benefits, as contributions are made pre-tax. All else being equal, enrollees will see lower overall costs if they can use pre-tax dollars to cover eligible deductible expenses.

Additionally, independent practices can seek to educate on, offer, and recommend cost-effective healthcare services. Examples of cost-effective healthcare services include urgent care access outside of emergency rooms, in-clinic outpatient surgeries and procedures, and primary care access through Nurse Practitioners. Substituting more costly care for these relatively affordable services can significantly reduce the cost of healthcare services for patients.

Another strategy involves coaching patients on their thinking around insurance coverage. Patients may find it helpful to see it as a discount program until the deductible is met instead of viewing it as a system covering healthcare costs. One of the most straightforward cases of insurance coverage acting as a discount program relates to in-network providers. By using these in-network providers, plan members can sometimes find considerable savings in the negotiated rates.

Finally, it is critical to encourage patients to review health plan choices regularly. An annual review allows patients to evaluate if their chosen plan continues to meet their needs in the face of changing deductibles and healthcare costs. This proactive approach to healthcare management can help patients remove unnecessary expenses related to benefits, maximize plan value, and help manage financial implications.

The healthcare landscape is constantly changing. Given the upcoming increase in minimum deductibles, it is more critical than ever that independent practices partner with their patients to maintain affordable access to care. These changes can significantly impact household finances, so it is important to help patients review their options carefully. 

By staying informed and strategically advising patients, independent practices can help patients successfully navigate the rise in minimum deductibles and manage their healthcare costs effectively.