The Internal Revenue Service just announced next year’s inflation-adjusted quantities of health saving accounts. In Rev. Proc. 2020-32, the IRS states that the annual limitation on deductions under Code Section 223(b)(2)(A) for a person with self-only coverage under a high deductible plan is $3,600, increasing $50 from this year’s limit.
For the 2021 calendar year, the IRS describes a high deductible health plan as one with an annual deductible for less than $1,400 for self-only coverage or $2,800 for family coverage. These minimum annual deductible levels did not change from the 2020 levels. Additionally, the yearly limitations on deductions for a person with family coverage under an HDHP is $7,200, $100 more than the 2020 limits. Annual out-of-pocket costs for 2021 under an HDHP—normally characterized as deductibles, co-payments and other amounts, but not premium—are curbed to $7,000 for self-only coverage and $14,000 for family coverage, making these levels up $100 and $200 correspondingly from the 2020 limits.
Congruently, the HSA catch-up contribution limit for people 55 and older will continue at $1,000, as there was no change of this in the revenue procedure. The cost-of-living adjustments for various benefit limitations and retirement plan contribution that will come into force for the upcoming year usually are not announced until late October or early November.
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