The Internal Revenue Service (IRS) recently released the 2020 annual contribution limits for health savings accounts (HSAs). These limits are typically adjusted each year for inflation.
The 2020 limits are $3,550 for an individual with self-only coverage and $7,100 for an individual with family coverage up $50 and $100 respectively. Catch-up contributions for individuals age 55 or older remain $1,000. Such pre-tax contributions can only be made to an HSA that is maintained in conjunction with a high-deductible health plan.
A high-deductible plan for 2020 is defined as a plan with an annual deductible of $1,400 or more for self-only coverage or $2,800 or more for family coverage up $50 and $100 respectively. The corresponding maximum out-of-pocket expense is $6,900 and $13,800, respectively, which is an increase from the 2019 amounts of $150 and $300.
Health savings accounts continue to be a powerful tool in combating the rise in health costs, especially for young healthy people. Employers should continue to evaluate their effectiveness as part of an overall health benefits strategy.
If you have any questions about HSAs or the new contribution limits, please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301.231.6257.