IRS Announces 2021 HSA and HDHP Limits

On May 20, 2020, the IRS released Revenue Procedure 2020-32, which provides the 2021 inflation-adjusted limits for HSAs and HSA-qualifying HDHPs. According to the revenue procedure, the 2021 annual HSA contribution limit will increase to $3,600 for individuals with self-only HDHP coverage, up $50 from 2020, and to $7,200 for individuals with anything other than self-only HDHP coverage (family or self + 1, self + child(ren), or self + spouse coverage), up $100 from 2020.

For qualified HDHPs, the 2021 minimum statutory deductibles remain at $1,400 for self-only coverage and $2,800 for individuals with anything other than self-only coverage (the same as for 2020). The 2021 maximum out-of-pocket limits will increase to $7,000 for self-only coverage (up $100 from 2020) and up to $14,000 for anything other than self-only coverage (up $200 from 2020). For reference, out-of-pocket limits on expenses include deductibles, copayments and coinsurance, but not premiums. Additionally, the catch-up contribution maximum remains $1,000 for individuals aged 55 years or older (this is a fixed amount not subject to inflation).

The 2020 limits may impact employer benefit strategies, particularly for employers coupling HSAs with HDHPs. Employers should ensure that employer HSA contributions and employer-sponsored qualified HDHPs are designed to comply with 2021 limits.

Rev. Proc. 2020-32 »