IRS Announces 2021 Limits for Health Savings Accounts and High-Deductible Health Plans

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The Internal Revenue Service recently announced cost-of-living adjustments to the applicable dollar limits for health savings accounts and high-deductible health plans for 2021. Some of the dollar limits currently in effect for 2020 will change for 2021.

IN DEPTH


Recently, the Internal Revenue Service (IRS) announced (see Revenue Procedure 2020-32) cost-of-living adjustments to the applicable dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2021. Many of the dollar limits currently in effect for 2020 will change for 2021. The HSA catch-up contribution for individuals age 55 or older will not change as it is not subject to cost-of-living adjustments.

The table below compares the applicable dollar limits for HSAs and HDHPs for 2020 and 2021.

HEALTH AND WELFARE PLAN LIMITS 2020 2021
HDHP – Maximum annual out-of-pocket limit (excluding premiums)
Self-only coverage $6,900 $7,000
Family coverage $13,800 $14,000
HDHP – Minimum annual deductible
Self-only coverage $1,400 $1,400
Family coverage $2,800 $2,800
HSA – Annual contribution limit
Self-only coverage $3,550 $3,600
Family coverage $7,100 $7,200
Catch-up contributions (age 55 and older) $1,000 $1,000

Next Steps

Plan sponsors should update payroll and plan administration systems for the 2021 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, such as open enrollment and communication materials, plan documents, and summary plan descriptions.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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