Key HSA Highlights
The IRS announced May 28 that health savings account contribution limits for 2020 are going up $50 for self-only coverage and $100 for family coverage.
Health savings accounts, or HSA’s are a popular type of tax-advantaged medical savings account available to individuals enrolled in high deductible health plans or HDHP’s. Individuals can use their HSAs to pay for expenses covered under the HDHP until their deductible has been met, or they can use their HSAs to pay for qualified medical expenses that are not covered under the HDHP, such as dental or vision expenses. HSAs provide a triple tax advantage—contributions, interest and earnings, and amounts distributed for qualified medical expenses are all exempt from federal income tax, Social Security/Medicare tax and most state income taxes. Due to an HSA’s potential tax savings, federal tax law includes strict rules for HSAs, including limits on annual contributions and HDHP cost sharing. This Compliance Overview summarizes key features for HSAs, including the contribution limits for 2020.
2020 CONTRIBUTION LIMITS
- For 2020, $3,550 for individuals with self-only HDHP coverage and $7,100 for individuals with family HDHP coverage.
- Individuals who are age 55 or older may make an additional $1,000 “catch-up” contribution.
2020 HDHP COST-SHARING LIMITS
- For 2020 plan years, the minimum deductible is $1,400 for self-only HDHP coverage and $2,800 for family HDHP coverage.
- For 2020 plan years, the out-of-pocket maximum is $6,900 for self-only HDHP coverage and $13,800 for family HDHP coverage.