The IRS Releases Inflation-Adjusted Limits for HSAs and HDHPs for 2021
Each year, the Internal Revenue Service (IRS) announces inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs), and they are required to do so by June 1. On May 20, 2020, they released Revenue Procedure 2020-32 to provide the inflation-adjusted limits for HSAs and HDHPs for 2021.
What do these limits include?
- The maximum HSA contribution limit;
- The minimum deductible amount for HDHPs; and
- The maximum out-of-pocket expense limit for HDHPs.
Limits vary based on whether an individual has self-only or family coverage under a HDHP. The adjusted contribution limits for HSAs take effect on January 1, 2021. The adjusted HDHP cost-sharing limits take effect for the plan year beginning on or after January 1, 2021. The table below shows HSA and HDHP limits for 2021. Also included in this table are the catch-up contribution limits that apply to HSA-eligible individuals who are age 55+, not adjusted for inflation. These stay the same from year to year.
What do these 2021 HSA/HDHP limit increases mean for employers?
If you are an employer that sponsors HDHPs, we recommend that you review your plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for 2021 plan year.
If you have any questions about inflation-adjusted limits for HSAs and HDHPs for 2021, contact the Employee Benefits Management Group (EBMG) at Rose & Kiernan, Inc. here or by calling (800) 242-4433.