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IRS Announces 2021 Limits for Health Savings Accounts and High-Deductible Health Plans

The Internal Revenue Service recently announced cost-of-living adjustments to the applicable dollar limits for health savings accounts and high-deductible health plans for 2021. Some of the dollar limits currently in effect for 2020 will change for 2021.

IN DEPTH


Recently, the Internal Revenue Service (IRS) announced (see Revenue Procedure 2020-32) cost-of-living adjustments to the applicable dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2021. Many of the dollar limits currently in effect for 2020 will change for 2021. The HSA catch-up contribution for individuals age 55 or older will not change as it is not subject to cost-of-living adjustments.

The table below compares the applicable dollar limits for HSAs and HDHPs for 2020 and 2021.

HEALTH AND WELFARE PLAN LIMITS

2020

2021

HDHP – Maximum annual out-of-pocket limit (excluding premiums)

Self-only coverage

$6,900

$7,000

Family coverage

$13,800

$14,000

HDHP – Minimum annual deductible

Self-only coverage

$1,400

$1,400

Family coverage

$2,800

$2,800

HSA – Annual contribution limit

Self-only coverage

$3,550

$3,600

Family coverage

$7,100

$7,200

Catch-up contributions (age 55 and older)

$1,000

$1,000

Next Steps

Plan sponsors should update payroll and plan administration systems for the 2021 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, such as open enrollment and communication materials, plan documents, and summary plan descriptions.

© 2020 McDermott Will & Emery

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About this Author

Jacob Mattinson Employee Benefits Attorney
Associate

Jacob M. Mattinson focuses his practice on employee benefits and matters related to 401(k), 403(b), pension, executive compensation, health care reform, and cafeteria and welfare plans.

Jacob assists clients in drafting employee benefit plan documents and amendments. He represents clients in matters before the Internal Revenue Service (IRS), US Department of Labor (DOL) and Pension Benefit Guaranty Corporation with respect to plan qualification issues. He also counsels privately and publicly held corporations and tax-exempt entities on a variety of benefits and Employee Retirement...

312-984-3263
Judith Wethall, McDermott Law Firm, Chicago, Labor and Employment Law Attorney
Partner

Judith Wethall focuses her practice on employee benefits, specifically health and welfare programs. She counsels employers, plan administrators, insurers and consultants on a wide range of ERISA compliance issues. Judith's clients include sole proprietors to Fortune 100 companies and cover a variety of industries including health care, technology, manufacturing, insurance and financial.

Judith has extensive experience advising clients on health care law reform; wellness programs; Medicare secondary payor rules; fiduciary compliance; disability leaves and FLMA; the Health Insurance Portability and Accountability Act (HIPAA) privacy and security compliance; subrogation and claims reimbursement; state and local compliance; consumer driven health care initiatives, including HRAs and HSAs; continuation coverage (COBRA); fringe benefit programs; executive physical programs; cafeteria plans and domestic partnership coverage.

312-984-7577