On May 20, 2020, the Internal Revenue Service (IRS) released Revenue Procedure 2020-32 announcing the annual inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2021. An HSA is a tax-exempt savings account that employees can use to pay for qualified health expenses.
To be eligible for an HSA, an employee:
The limits vary based on whether an individual has self-only or family coverage under an HDHP. The limits are as follows:
* The deductible does not apply to preventive care services nor to services related to testing for COVID-19. An HDHP also may choose to waive the deductible for coverage of COVID-19 treatment, and/or telehealth and other remote care services.
** If the HDHP is a nongrandfathered plan, a per-person limit of $8,550 also will apply due to the Affordable Care Act’s cost-sharing provision for essential health benefits.