IRS Announces Slight Bump in 2021 HSA Limits

While next year may seem like a ways off, the IRS has just published the 2021 inflation-adjusted amounts for health savings accounts (HSAs).

In Revenue Procedure 2020-32 the IRS announced that for calendar year 2021, the annual limitation on deductions under Code Section 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan (HDHP) is $3,600, up $50 from the 2020 limits.   

Additionally, for calendar year 2021, the annual limitation on deductions under Section 223(b)(2)(B) for an individual with family coverage under a HDHP is $7,200, an increase of $100 from the 2020 limits. 

For calendar year 2021, the IRS defines a high deductible health plan under Section 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage. These minimum annual deductible levels are unchanged from the 2020 levels. 

In addition, annual out-of-pocket expenses for calendar year 2021 under an HDHP—generally defined as deductibles, co-payments and other amounts, but not premiums—are limited to $7,000 for self-only coverage and $14,000 for family coverage. These levels are up $100 and $200, respectively, from the 2020 limits.

It appears the HSA catch-up contribution limit for individuals 55 and older will remain at $1,000, as there was no mention of it in the revenue procedure.

The cost-of-living adjustments for various retirement plan contribution and benefit limitations that will take effect for the coming year generally are not released until late October or early November.