Tax Update Blog

IRS Issues Health Savings Account (HSA) limits for 2021

May 21, 2020 | Blog

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:

          2019         2020            2021
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.

 

 


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