HDHP and HSA | Ed Slott and Company, LLC


Hi. My son started his first job after graduating from college. His employer offers a health plan that has a $3200 deductible and a $7900 max out of pocket. While it seems to meet IRS requirements on the deduction for a qualified high deductible health plan (hdhp) , the out of pocket does not as it must be less than $6900 for an individual. As I understand this, then it is not an hdhp and no hsa possible. Is this correct? Any ideas on why the IRS puts a limit on the out of pocket expenses? I don't understand that. Seems like this health plan is an ultra high out of pocket plan. We thought this plan would allow an HSA but it seems to not be the case which is disappointing. Thanks.

  • The IRS just enforces the Internal Revenue Code. It was Congress that placed upper limits on the maximum out-of-pocket (OOP). This was to discourage employers from having ridiculously high max OOP.
  • Your son should probably consider this starter job. This employer clearly has no regard for the interests of its employees and obviously was seeking the absolute minimum health insurance premiums it could find. Not only was it cheap, but incompentent. It could have passed the miniscule increase in premiums to be an HSA qualifiying HDHP onto the employees. They would have been far better off.

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