The IRS has issued (Rev. Proc. 2020-32) the inflation-adjusted limits for Health Savings Accounts for 2021. The 2021 amounts, and the comparable amounts for 2019 and 2020:
|HSA Contribution limit: Single plans||$ 3,500||$ 3,550||$ 3,600|
|HSA Contribution limit: Family plans||$ 7,000||$ 7,100||$ 7,200|
|Minimum deductible, Single plans||$ 1,350||$ 1,400||$ 1,400|
|Minimum deductible, Family plans||$ 2,700||$ 2,800||$ 2,800|
|Out-of-pocket cap, Single plans||$ 6,750||$ 6,900||$ 7,000|
|Out-of-pocket cap, Family plans||$ 13,500||$ 13,800||$ 14,000|
Health Savings Accounts are IRA-like accounts designed to accumulate funds for coverage of out-of-pocket health costs. Qualifying contributions generate an "above-the-line" deduction on 1040s, with no phaseouts for high-income filers.
HSAs are often overlooked as a personal financial planning tool. The high deductible can lower health insurance costs for qualifying taxpayers. For higher-income individuals, the combination of an up-front deduction and tax-deferred accumulation of earnings on savings make them a powerful savings vehicle.
Qualifying taxpayers can still make 2019 contributions to their HSAs through the deferred July 15 1040 filing deadline.
To learn more about whether HSAs should be part of your financial planning, contact a member of the Eide Bailly Wealth Planning team or your local Eide Bailly professional.