IRS Announces HSA Limits for 2021

On May 20, 2020, the Internal Revenue Service (IRS) released Revenue Procedure 2020-32 announcing the annual inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2021. An HSA is a tax-exempt savings account that employees can use to pay for qualified health expenses.

To be eligible for an HSA, an employee:
  • Must be covered by a qualified high deductible health plan (HDHP);
  • Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
  • Must not be enrolled in Medicare; and
  • May not be claimed as a dependent on someone else’s tax return.

The limits vary based on whether an individual has self-only or family coverage under an HDHP. The limits are as follows:

  • 2021 HSA contribution limit:
  • Single: $3,600 (an increase of $50 from 2020)
  • Family: $7,200 (an increase of $100 from 2020)
  • Catch-up contributions for those age 55 and older remains at $1,000
  • 2021 HDHP minimum deductible*
  • Single: $1,400 (no change from 2020)
  • Family: $2,800 (no change from 2020)
  • 2021 HDHP maximum out-of-pocket limit:
  • Single: $7,000 (an increase of $100 from 2020)
  • Family: $14,000** (an increase of $200 from 2020)

*   The deductible does not apply to preventive care services nor to services related to testing for COVID-19. An HDHP also may choose to waive the deductible for coverage of COVID-19 treatment, and/or telehealth and other remote care services.

**   If the HDHP is a non-grandfathered plan, a per-person limit of $8,550 also will apply due to the Affordable Care Act’s cost-sharing provision for essential health benefits.

Topics: Benefits

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