The Internal Revenue Service recently announced the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2021. As always, the limits vary based on whether the coverage is self-only or a family plan. Let’s take a look:
Eligible individuals with self-only HDHP coverage will be able to increase their annual HSA contribution to $3,600 in 2021, an increase of $50 from the current year. Those with family HDHP coverage will be allowed a maximum HSA contribution of $7,200 for 2021, up from $7,100 in 2020. Additionally, provisions of the CARES Act greatly widened the list of items eligible for HSA reimbursement to include many personal items that were previously not qualified.
Those 55 and older will be permitted an additional $1,000 “catch up” contribution to their HSAs.
The minimum deductible amounts for HDHPs in 2021 will remain unchanged at $1,400 for self-only coverage and $2,800 for family coverage. The HDHP maximum out-of-pocket expense does increase for 2021, rising to $7,000 for self-only coverage and $14,000 for family coverage.
One other important note for employers: the IRS also released a notice providing temporary flexibility for midyear election changes in Section 125 cafeteria plans for 2020. The changes are intended to allow employers to better respond to changes in the needs of their employees as a result of the COVID-19 pandemic. Employees may be permitted to make midyear election changes whether or not they satisfy existing election change rules.
Questions about these issues or other company benefits? Contact Consolidated Insurance.