IRS Increases HSA Contribution Limit for 2021
The Internal Revenue Service (IRS) issued its annual health savings account contribution adjustment on Wednesday, May 20, for 2021, at a time when many taxpayers are worried about their health in the midst of the novel coronavirus pandemic.
Limits for 2021
In Revenue Procedure 2020-32, the IRS said for calendar year 2021, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,600. That’s up from $3,500 this year
For 2021, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,200, up from $7,100 in 2020.
Account owners 55 years and older can still contribute up to $1,000 (no change) over their annual limit. People who have self-only coverage can contribute a maximum of $4,600; those with family coverage can contribute a maximum of $8,200.
High Deductible Health Plan Deductibles
For 2021, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage (this year, it can’t exceed $6,900 for self-only coverage or $13,800 for family coverage).
Out-of-Pocket Maximums
The IRS raised out-of-pocket maximums for 2021 as well. For self-only coverage, the maximum increased by $100, from $6,900 to $7,000. For family coverage, the maximum increased by $200, from $13,800 to $14,000.
2021 HSA Contribution Limits
CARES Act
Signed into law at the end of March, the CARES Act is now allowing people to use an HSA or a flexible spending account to pay for over-the-counter drugs and medicine, such as allergy medications and pain relievers, without a doctor’s prescription. The CARES Act also allows the use of HSAs for telehealth and other remote care services until Dec. 31, 2021.