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IRS Announces 2021 HSA Contribution Limits, HDHP Minimum Deductibles, and HDHP Out-of-Pocket Maximums

EBIA  

EBIA  

Rev. Proc. 2020-32, 2020-24 I.R.B. __ (June 8, 2020)

Available at https://www.irs.gov/pub/irs-drop/rp-20-32.pdf

The IRS has released the 2021 cost-of-living adjusted limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs). Here are the details:

  • HSA Contribution Limits. The 2021 annual HSA contribution limit is $3,600 for individuals with self-only HDHP coverage (up from $3,550 in 2020), and $7,200 for individuals with family HDHP coverage (up from $7,100 in 2020).
  • HDHP Minimum Deductibles. The 2021 minimum annual deductible is $1,400 for self-only HDHP coverage (unchanged from 2020) and $2,800 for family HDHP coverage (unchanged from 2020).
  • HDHP Out-of-Pocket Maximums. The 2021 limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) is $7,000 for self-only HDHP coverage (up from $6,900 in 2020), and $14,000 for family HDHP coverage (up from $13,800 in 2020).

EBIA Comment: Because the increases to the HDHP out-of-pocket maximums are larger than the increases to the HSA contribution limits, some individuals may have to pay more out-of-pocket expenses without the benefit of the HSA tax break. The catch-up contribution limit (for HSA-eligible individuals age 55 or older) is set forth in Code § 223(b)(3) and remains at $1,000 for 2021. For more information, see EBIA’s Consumer-Driven Health Care manual at Sections X (“HSAs: Required HDHP Coverage”) and XII (“HSAs: Contributions”). See also EBIA’s Cafeteria Plans manual at Section XVI.K (“Special Considerations for HSAs Offered Through Cafeteria Plans”).

Contributing Editors: EBIA Staff.