We previously reported the new 2023 numbers for gift and estate tax exclusions and the coming Social Security cost of living increase, the biggest in four decades.
Now we have some more numbers to report.
Retirement Plan Contributions
The IRS has announced a record increase in contribution limits to 401(k) and other tax-deferred retirement plans for 2023. Starting next year, workers will be allowed to contribute up to $22,500 into their 401(k) or 403(b) plan, a $2,000 jump — or roughly 9.8 percent — from the current $20,500 federal contribution limit. The increase is largely due to inflation, to which the contribution limits are indexed.
In addition, those who are 50 or older may contribute more through catch-up contributions. In 2023, it will rise to $7,500, up 15.4 percent from $6,500 today. That means that individuals 50 or older can contribute up to $30,000 in 2023, combining the standard amount plus their catch up bonus. (Of course, they or their heirs will have to pay taxes when the retirement funds are withdrawn, but presumably they’ll be in a lower tax bracket at that point.)
Medicaid (MassHealth)
Here are the new Medicaid (MassHealth in Massachusetts) numbers as calculated by Pennsylvania elder law attorney Robert Clofine. He provides his predictions based on the Consumer Price Index for ElderLawAnswers.com.
- Maximum community spouse resource allowance (CSRA): $148,620 (compared to this year’s $137,400). This is the amount of a married couple’s combined countable assets that the healthy or “community” spouse may keep with the nursing home spouse qualifying for MassHealth coverage. The house and certain other items are not counted against this limit. Since the nursing home spouse may also keep $2,000, $150,000 is a good round number to keep in mind.
- Minimum CSRA: $29,724 (this year, it is $27,480). (This is irrelevant in Massachusetts. Some states only permit community spouse’s to keep half the couple’s countable assets up to the CSRA. In those states, if half falls below the minimum CSRA, then the could gets to keep the minimum. Fortunatey, we apply the one-half rule in Massachusetts.)
- Maximum monthly maintenance needs allowance should rise to $3,715.50 (from $3,435). This is a calculation of how much of a couple’s combined income the community spouse is entitled to keep rather than paying over as a contribution to the cost of care for the ill spouse. It’s based on a formula that takes into account the community spouse’s housing and some other expenses. The figure is the maximum income allowance no matter the results of the formula. However, there are also instances where the calculation may be appealed, generally if the community spouse has their own care expenses.
