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Health Savings Account Cost of Living Adjustments Announced for 2020

Jun 04, 2019

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.

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.

For a helpful HSA summary, click here.

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 BussAngie Whiteside or your Wipfli relationship executive.