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.
|Limit on HSA Contributions* – single coverage
|Limit on HSA Contributions* – family coverage
|HDHP Required Minimum Deductible – single coverage
|HDHP Required Minimum Deductible – family coverage
|HDHP Out-of-Pocket Maximum – single coverage
|HDHP Out-of-Pocket Maximum – family coverage
|HSA Catch-up Contribution
*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 Buss, Angie Whiteside or your Wipfli relationship executive.