Health Savings Account Cost of Living Adjustments Announced for 2020
The Internal Revenue Service (IRS) has announced in Revenue Procedure 2019-25 the annual cost of living adjustments for Health Savings Account (HSA) contribution limits for calendar year 2020. These limits apply for qualifying High Deductible Health Plan (HDHP) deductibles and out-of-pocket maximums. Important for individuals and businesses alike, plan sponsors should verify that their administrative and payroll systems reflect the appropriate limits.
| 2020 | 2019 | |
| Limit on HSA Contributions* – single coverage | $3,550 | $3,500 |
| Limit on HSA Contributions* – family coverage | $7,100 | $7,000 |
| HDHP Required Minimum Deductible – single coverage | $1,400 | $1,350 |
| HDHP Required Minimum Deductible – family coverage | $2,800 | $2,700 |
| HDHP Out-of-Pocket Maximum – single coverage | $6,900 | $6,750 |
| HDHP Out-of-Pocket Maximum – family coverage | $13,800 | $13,500 |
| HSA Catch-up Contribution | $1,000 | $1,000 |
*The above figures do not include the catch-up contribution limit, which is $1,000 for participants age 55 or older. Catch-up contributions can be made any time during the year in which the HSA participant turns 55. |
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Individuals who participate in an HDHP are permitted a deduction for contributions to HSAs set up to help pay the medical expenses of the participant, spouse and/or dependents. To be eligible to contribute to an HSA, individuals must participate in an HDHP, which is defined as a health plan with an annual deductible that is not less than the minimum deductibles noted above and for which the annual out-of-pocket expenses — including deductibles, co-payments and other amounts, but excluding premiums — does not exceed the out-of-pocket maximum annually. In addition, individuals may not receive benefits from other health plans that would be construed as impermissible coverage, such as a general-purpose health flexible spending account, certain prescription drug benefits, etc. The limits noted above are subject to an inflation adjustment each year.
If you have any questions, or for more information about the 2020 HSA cost-of-living adjustments, we encourage you to contact Marci Boyarski, Tom Krieg, Bob Buss, Angie Whiteside or your Wipfli relationship executive.
