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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:
- Must be covered by a qualified high deductible health plan (HDHP);
- Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
- Must not be enrolled in Medicare; and
- May not be claimed as a dependent on someone else’s tax return.
The limits vary based on whether an individual has self-only or family coverage under an HDHP. The limits are as follows:
- 2021 HSA contribution limit:
- Single: $3,600 (an increase of $50 from 2020)
- Family: $7,200 (an increase of $100 from 2020)
- Catch-up contributions for those age 55 and older remains at $1,000
- 2021 HDHP minimum deductible*
- Single: $1,400 (no change from 2020)
- Family: $2,800 (no change from 2020)
- 2021 HDHP maximum out-of-pocket limit:
- Single: $7,000 (an increase of $100 from 2020)
- Family: $14,000** (an increase of $200 from 2020)
* 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.
Kathy Berger is ThinkHR’s principal benefits consultant. She is a Certified Employee Benefits Specialist (CEBS) with over 25 years of experience working with brokers and employers. Kathy uses her extensive knowledge of ERISA, HIPAA, the ACA, and other benefits laws and regulations to assist our clients with practical information in clear language.