The Internal Revenue Service (IRS) recently announced new 2016 HSA contribution limits.
HSA plans are popular among workers who are enrolled in high-deductible health plans (HDHP) because they can make untaxed contributions into an account for medical expenses, reducing their overall tax bill to the IRS. In addition, account holders can roll over unused funds year after year, unlike with Flexible Spending Accounts (FSAs) which have a “use it or lose it” policy. Investing in an HSA could result in a reduction of personal health care costs as time progresses.
Other financial incentives to open an HSA account include earning interest on the funds and being able to invest funds when you meet a mandatory minimum amount.
The 2016 HSA Policy has increased out-of-pocket limits for individuals and families, and annual contribution limits for family coverage.
Here’s a summary of the 2016 HSA contribution limits:
2016 Individual Coverage:
- Annual deductible must be at least $1,300 for non-embedded, and $2,600 for embedded (No change from 2015)
- Annual out-of-pocket limits may not exceed $6,550 ($100 increase from 2015)
- Annual contribution limits are $3,350 (No change from 2015)
2016 Family Coverage:
- Annual deductible must be at least $2,600 (No change from 2015)
- Annual out-of-pocket limits may not exceed $13,100 ($200 increase from 2015)
- Annual contribution limits are $6,750 ($100 increase from 2015)
This is big news for Americans with HDHP healthcare insurance. Make sure you consider increasing your HSA contributions as it can save you money now and potentially in the future.