The IRS recently announced that the annual limit on deductible contributions to an HSA will increase by $50 for individuals and $100 for families in 2020. Read this blog post for more on this increase to HSA limits.
Employees will be able to sock away some extra money into their health savings accounts next year.
The annual limit on deductible contributions to an HSA will jump by $50 for individuals and $100 for families next year, the IRS announced Tuesday.
For 2020, the annual limit on deductible contributions will be $3,550 for individuals with self-only coverage, a $50 increase from 2019, and $7,100 for family coverage, a $100 increase from 2019.
The minimum deductible for a qualifying high-deductible health plan also will increase to $1,400 for self-only coverage and $2,800 for family coverage.
Annual out-of-pocket expenses will see an even bigger jump next year. Deductibles, copayments and other amounts that do not include premiums will have a maximum limit of $6,900 for individual coverage next year, up from $6,750 in 2019, and $13,800 for family coverage, up from $13,500 in 2019.
HSA enrollment continues to grow, especially as employees look at the accounts as a way to save for medical expenses in retirement. The number of HSAs grew 13% over the past year to top 25 million, according to research firm Devenir, while assets grew 19% to $53.8 billion. Devenir projects the number of HSAs to hit 30 million by 2020, with $75 billion in total assets and $16.7 billion in investment assets.
More employers are also offering employees contributions to their accounts. Indeed, the average HSA employer contribution rose to $839 last year, up 39% from $604 in 2017, according to Devenir. All told, employer contributions totaled almost $9 billion last year.
HSAs also saw a boon this year with Amazon’s decision to allow consumers to use the accounts to buy thousands of items on its site, a move that was ballyhooed as a positive for HSA customers, as well as Amazon. Items will be listed on Amazon as “FSA or HSA eligible” on the individual product pages; a full list of items can also be browsed on Amazon’s website.
“By accepting HSA dollars, Amazon is finally giving this untapped savings tool its moment to shine,” David Vivero, co-founder and CEO at Amino, an employee financial wellness platform, wrote recently in an Employee Benefit News blog. “Every payment method or currency — whether it’s dollars, airline miles, bitcoins or credit cards — depends on reliable large-scale merchant acceptance to become truly mainstream.”
Amazon’s chief competitor, Walmart, allows consumers to use HSA and FSA cards to purchase medical items, as well.
HSA contribution limits are updated annually to reflect cost-of-living adjustments. The increases are detailed in Revenue Procedure 2019-25 and take effect in January.
SOURCE: Mayer, K. (28 May 2019) “IRS increases 2020 HSA limits” (Web Blog Post). Retrieved from https://www.benefitnews.com/news/irs-announces-2020-hsa-limits