The IRS recently released Revenue Procedure 2020-32, the 2021 annual contribution limits for health savings accounts (HSAs). These limits are typically adjusted each year for inflation.
The 2021 limits are $3,600 for an individual with self-only coverage and $7,200 for an individual with family coverage. 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 2021 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. The corresponding maximum out-of- pocket expenses are $7,000 and $14,000 respectively, which is an increase from the 2020 amounts.
Health savings accounts continue to be a powerful tool in combating the rise in health costs especially in light of the COVID-19 pandemic. Employers should continue to evaluate their effectiveness as part of the overall health benefits strategy.
If you should have any questions, please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301.231.6257.