Smart Benefits: HSA and High Deductible Health Plan Limits Increase for 2021

Monday, June 08, 2020

Sam Slade, Contributor

 

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Sam Slade of Hilb

On May 20, 2020, the IRS released Revenue Procedure 2020-32 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2021.

The IRS is required to publish these limits by June 1 of each year. These limits include:

·       The maximum HSA contribution limit;

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·       The minimum deductible amount for HDHPs; and

·       The maximum out-of-pocket expense limit for HDHPs.

These limits vary based on whether an individual has self-only or family coverage under an HDHP.

Eligible individuals with self-only HDHP coverage will be able to contribute $3,600 to their HSAs for 2021, up from $3,550 for 2020. Eligible individuals with family HDHP coverage will be able to contribute $7,200 to their HSAs for 2021, up from $7,100 for 2020. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.

The minimum deductible amount for HDHPs remains the same for 2021 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,000 for self-only coverage and $14,000 for family coverage.

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The new contribution limits for HSAs become effective January 1, 2021. The HDHP cost-sharing limits for 2021 apply for plan years beginning on or after Jan. 1, 2021.

Employers that sponsor and HSA/HDHP accounts should review their plans cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2021. Those who allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.

Sam Slade is Managing Director, Employee Benefits, at The Hilb Group of New England, where he delivers consultative advice and services. He is an industry veteran with extensive experience in all aspects of employee benefits, including underwriting, plan design, communications, compliance, and analytics, with a particular focus on alternative funding and self-insurance. Most recently, Sam served as Vice President of the Employer Segment at BCBSRI, where he worked to help the company evolve its self-insured capabilities. Previously, he was the Employee Benefits Practice Leader for USI in Rhode Island after selling his own firm, Bluff Head Enterprises, to the company in 2011. Sam’s career started with The Travelers.

 

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