IRS increases HSA limits for 2020
Posted June 3, 2019
On May 28, the IRS published the 2020 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under §223 of the Internal Revenue Code.
For calendar year 2020, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,550, up only $50 from the 2019 limit of $3,500.
For calendar year 2020, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,100, an increase of $100 from the 2019 limit of $7,000.
High deductible health plan
For calendar year 2020, a high deductible health plan (HDHP) is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage (up from $1,350 for 2019) or $2,800 (up from $2,700 for 2019) for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,900 for self-only coverage (up from $6,750 for 2019) or $13,800 for family coverage (up from $13,500 for 2019).
These limits have generally increased every year, often by $50 or $100 for self-only coverage and $150 - $200 for family coverage.
An HSA is a type of savings account that lets individuals set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a HSA to pay for deductibles, copayments, coinsurance, and some other expenses, individuals can lower their overall health care costs.
An HSA can be used only if the individual has an HDHP — generally any health plan (including a Marketplace plan) with a deductible of at least those indicated.
Individuals have until they file taxes for 2019 to fund their HSA for 2019 health plans; they can fund the accounts all the way up into 2020.
This article was written by Darlene M. Clabault, SHRM-CP, PHR, CLMS, of J. J. Keller & Associates, Inc.
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