In May 2020, the IRS released Revenue Procedure 2020-32 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2021. The IRS is required to publish these limits by June 1 of each year.
These limits include:
- The maximum HSA contribution limit;
- The minimum deductible amount for HDHPs; and
- The maximum out-of-pocket expense limit for HDHPs.
These limits vary based on whether an individual has self-only or family coverage under an HDHP.
Eligible individuals with self-only HDHP coverage will be able to contribute $3,600 to their HSAs for 2021, up from $3,550 for 2020. Eligible individuals with family HDHP coverage will be able to contribute $7,200 to their HSAs for 2021, up from $7,100 for 2020. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.
The minimum deductible amount for HDHPs remains the same for the 2021 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,000 for self-only coverage and $14,000 for family coverage.
Highlights
- Each year, the IRS announces inflation-adjusted limits for HSAs and HDHPs.
- By law, the IRS is required to announce these limits by June 1 of each year.
- The adjusted contribution limits for HSAs take effect as of January 1, 2021.
- The adjusted HDHP cost-sharing limits take effect for the plan year beginning on or after January 1, 2021.
Important Dates
- January 1, 2021: The new contribution limits for HSAs become effective.
- 2021 Plan Years: The HDHP cost-sharing limits for 2021 apply for plan years beginning on or after January 1, 2021.
Action Steps
Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2021. Employers who allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.
HSA/HDHP Limits
The following chart shows the HSA and HDHP limits for 2021 as compared to 2020. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.
|
Type of Limit |
2020 |
2021 |
Change |
|
|
HSA Contribution Limit |
Self-only |
$3,550 |
$3,600 |
Up $50 |
|
Family |
$7,100 |
$7,200 |
Up $100 |
|
|
HSA Catch-up Contributions (not subject to adjustment for inflation) |
Age 55 or older |
$1,000 |
$1,000 |
No change |
|
HDHP Minimum Deductible |
Self-only |
$1,400 |
$1,400 |
No change |
|
Family |
$2,800 |
$2,800 |
No change |
|
|
HDHP Maximum Out-of-pocket Expense Limit (deductibles, copayments and other amounts, but not premiums) |
Self-only |
$6,900 |
$7,000 |
Up $100 |
|
Family |
$13,800 |
$14,000 |
Up $200 |
|
This Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2020 Zywave, Inc. All rights reserved.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.
