EBIA Weekly Newsletter

IRS Announces 2017 HSA Contribution Limits, HDHP Minimum Deductibles, and HDHP Out-of-Pocket Maximums

   May 5, 2016

Rev. Proc. 2016-28 (Apr. 28, 2016)

Available at http://www.irs.gov/pub/irs-drop/rp-16-28.pdf

The IRS has released the 2017 cost-of-living adjusted limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs). Here are the details:

  • HSA Contribution Limits. The 2017 annual HSA contribution limit for individuals with self-only HDHP coverage is $3,400, and the limit for individuals with family HDHP coverage is $6,750.
  • HDHP Minimum Deductibles. The 2017 minimum annual deductible for self-only HDHP coverage is $1,300 and the minimum annual deductible for family HDHP coverage is $2,600.
  • HDHP Out-of-Pocket Maximums. The 2017 maximum limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) for self-only HDHP coverage is $6,550, and the limit for family HDHP coverage is $13,100.

The $50 increase in the annual HSA contribution limit for individuals with self-only HDHP coverage is the only change from 2016. All of the other amounts are unchanged.

EBIA Comment: Because the HDHP out-of-pocket maximums will not increase in 2017, the increased contribution limit for individuals with self-only coverage will allow those individuals to use pre-tax HSA dollars to pay for a slightly higher proportion of their out-of-pocket expenses in 2017. Stability in the out-of-pocket maximums will also open a wider gap between the HSA limit and the higher, overall cost-sharing limit imposed by health care reform on non-grandfathered, nonexcepted group health plans, including HDHPs. (See our Checkpoint article on the 2017 health care reform cost-sharing limits.) But while the health care reform limits are nominally higher, plan sponsors need to remember that those limits have been interpreted in a way that could substantially reduce the uncovered expenses of some individuals with family coverage. (See our Checkpoint article on FAQ guidance explaining how the individual cost-sharing limit applies in the context of family coverage.) 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”) and EBIA’s Health Care Reform manual at Section IX.B.3 (“Dollar Amount of Overall Cost-Sharing Limits”).

Contributing Editors: EBIA Staff.