Health Savings Account (HSA)

What is an HSA?

Health Savings Accounts (HSAs) are tax-advantaged medical savings accounts available to United States taxpayers who are enrolled in a high deductible health plan (HDHP). HSAs are owned by the individual, differentiating them from company-owned health reimbursement arrangements (HRAs) that are an alternate tax-deductible source of funds paired with HDHPs. Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year over year if not spent, with the ability to earn tax-free interest on the account. HSA funds may be used to pay for qualified medical expenses at any time without a federal tax liability.

What is a Qualified High Deductible Health Plan?

A high deductible health plan (HDHP) is a health insurance policy that features higher deductibles and lower premiums than traditional insurance plans. HDHPs can be combined with a health savings account that allows for payment of qualified out of pocket medical expenses on a pre-tax basis.

For 2021, the HDHP required annual deductibles are $1,400 for single coverage (unchanged from 2020) and $2,800 for family coverage (unchanged from 2020).

The 2020, the HDHP required annual deductibles are $1,400 for single coverage and $2,800 for family coverage.

For 2021, the out of pocket maximums are $7,000 for single coverage (a $100 increase from 2020) and $14,000 for family coverage (a $200 increase from 2020). This includes items such as deductibles, copayments, and coinsurance, but not premiums.

The 2020, the out of pocket maximums are $6,900 for single coverage and $13,800 for family coverage. This includes items such as deductibles, copayments, and coinsurance, but not premiums.

How Much Can I Contribute to an HSA?

For 2021, the HSA contribution limits are $3,600 for single coverage (a $50 increase from 2020) and $7,200 for family coverage (a $100 increase from 2020). There is also a $1,000 catch up contribution allowed for those who are 55 years or older.                          

For 2020, the HSA contribution limits are $3,550 for single coverage and $7,100 for family coverage. There is also a $1,000 catch up contribution allowed for those who are 55 years or older.

2021 IRS Limits

                                                                Single Plan                 Family Plan

Maximum Contribution Limit                       $ 3,600                       $ 7,200

Minimum Deductible                                   $ 1,400                       $ 2,800

Maximum Out-of-pocket                             $ 7,000                       $ 14,000

Catch-up Contribution (55+)                       $ 1,000                       $ 1,000

 

2020 IRS Limits

                                                                  Single Plan                Family Plan

Maximum Contribution Limit                       $ 3,550                         $ 7,100

Minimum Deductible                                   $ 1,400                         $ 2,800

Maximum Out-of-pocket                             $ 6,900                         $ 13,800

Catch-up Contribution (55+)                       $ 1,000                         $ 1,000

 

What Are Qualified Medical Expenses?

You can pay for a wide range of IRS-qualified medical expenses with your HSA, including many that aren't typically covered by health insurance plans. This includes deductibles, co-insurance, prescriptions, dental and vision care, and more. For a complete list of IRS-qualified medical expenses, visit irs.gov.

 

Information Sourced From: https://www.irs.gov/pub/irs-irbs/irb19-22.pdf