On Tuesday, May 28, 2019, the Internal Revenue Service (IRS) announced the 2020 HSA contribution limits. Next year, Health Savings Account (HSA) owners will see an increase in both single and family plan limits, as well as higher annual deductible and out-of-pocket limits. The updated limits are published in Revenue Procedure 2019-25.
2020 HSA Contribution Limits
An important part of consumer directed healthcare (CDH), HSAs offer participants enrolled in a qualified high deductible health plan (HDHP) to save on taxes while setting aside money for out-of-pocket healthcare expenses for themselves and their families.
HSA owners can make tax-free contributions to their accounts. In 2020, the updated HSA contribution limits are:
- $3,550 for individuals, a $50 increase from 2019
- $7,100 for families, a $100 increase from 2019
2020 HSA Contribution Limits Table
|Single Coverage||Family Coverage|
|2020||$3,550 (+ $50)||$7,100 (+ $100)|
Catch Up Contributions
The 2020 catch up contributions remain the same at $1,000 over the annual limit. HSA owners aged 55 and older may contribute up to $4,550 for self-only and $8,100 for family coverage next year.
HSA account holders are eligible to make catch up contributions in the year they turn 55; they do not have to wait until the actual birth date for eligibility.
2020 HDHP Annual Deductibles and Out-of-Pocket Expense Limits
The IRS also announced increases to annual HDHP deductibles and out-of-pocket expense limits. Both self-only and family coverage limits have increased for 2020.
HDHP Minimum Deductible and Out-of-Pocket Maximums
|HDHP Minimum Deductible||Self-Only: $1,400 (+ $50) |
Family: $2,800 (+ $100)
Self-only: $1,350 |
|HDHP Out-of-Pocket Maximum||Self-only: $6,900 (+ $150)|
Family: $13,800 (+ $300)
Self-only: $6,750 |
The HDHP out-of-pocket maximums include deductibles, co-pays, and other amounts, but do not include insurance premiums.
Important HSA Notes
- HSA funds may be used for a long list of eligible healthcare expenses, including COBRA premiums. View a list of HSA eligible expenses.
- An HSA is owned solely by the account owner, even if the person has family coverage. The HSA owner may use the benefit dollars to pay for eligible expenses for themselves and their dependents.
- If married spouses each have self-only coverage, they can only contribute up to the self-only maximum.
- HSAs earn tax-free interest and tax-free investment income. These do not count towards the annual contribution limit.
- Account owners may fund their HSA from a personal IRA (traditional or Roth) once in their lifetime. The contribution counts towards the annual contribution limit.
- HSA owners have until the tax deadline (usually April 15) to contribute for the previous year
DataPath, Inc. is a leading provider of HSA management solutions for third party benefits administrators.