IRS Announces HSA Inflation-Adjusted Limits for 2020
By Sarah Brenner, JD
Follow Us on Twitter: @theslottreport
The IRS has announced the 2020 inflation-adjusted limits for Health Savings Accounts (HSAs).
How an HSA Works
An HSA is a tax-free account that is used to pay for qualified medical expenses that aren’t covered by insurance. It is similar to an IRA in that it’s a custodial or trust account set up with a financial institution owned and controlled by the individual, not the employer.
An HSA is designed to be used in conjunction with a high deductible health plan (HDHP). The HSA can be used to pay for health expenses until the plan deductible is met. The HDHP would then cover the high-cost medical expenses.
An HSA can offer the best of both worlds. Contributions are tax deductible and distributions taken to pay for qualified medical expenses are tax-free. There are no income limits for contributions and there is no requirement that an individual have earned income.
New 2020 Limits
For 2020, the annual HSA contribution limit for an individual with self-only coverage under a HDHP will be $3,550 (up from $3,500 for 2019). For those with family coverage, the contribution limit will be $7,100 (up from $7,000 for 2019).
For 2020, to be considered an HDHP for HSA purposes, a plan must have an annual deductible that is not less than $1,400 (up from $1,350 for 2019) for self-only coverage or $2,800 (up from $2,700 for 2019) for family coverage. Annual out-of-pocket expenses cannot exceed $6,900 (up from $6,750 for 2019) for self-only coverage or $13,800 (up from $13,500 for 2019) for family coverage.
Content Citation Guidelines
Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.
Please be advised that prior to distributing re-branded content, you must send a proof to email@example.com for approval.
For white papers/other outflow pieces:
Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.
Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.
For Slott Report articles:
Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.
Please contact Matt Smith at firstname.lastname@example.org or (516) 536-8282 with any questions.