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Benefits

IRS Announces 2020 HSA Contribution Limits, HDHP Minimum Deductibles, and HDHP Out-of-Pocket Maximums

EBIA  

EBIA  

Rev. Proc. 2019-25, 2019-22 I.R.B. 1261 (May 28, 2019)

Available at https://www.irs.gov/pub/irs-irbs/irb19-22.pdf

The IRS has released the 2020 cost-of-living adjusted limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs). Here are the details:

  • HSA Contribution Limits. The 2020 annual HSA contribution limit is $3,550 for individuals with self-only HDHP coverage (up from $3,500 in 2019), and $7,100 for individuals with family HDHP coverage (up from $7,000 in 2019).
  • HDHP Minimum Deductibles. The 2020 minimum annual deductible is $1,400 for self-only HDHP coverage (up from $1,350 in 2019) and $2,800 for family HDHP coverage (up from $2,700 in 2019).
  • HDHP Out-of-Pocket Maximums. The 2020 limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) is $6,900 for self-only HDHP coverage (up from $6,750 in 2019), and $13,800 for family HDHP coverage (up from $13,500 in 2019).

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 2020. 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”). You may also be interested in our webinar, “Workplace Health Savings Accounts (HSAs)” (recorded on 4/29/19).

Contributing Editors: EBIA Staff.

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