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.
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)|
|HDHP – Minimum annual deductible|
|HSA – Annual contribution limit|
|Catch-up contributions (age 55 and older)||$1,000||$1,000|
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.
Originally published May 20, 2020.