In early May, the IRS released new information around 2016 eligibility and contribution limits for health savings accounts (HSAs), as well as minimum deductions for HDHPs (high deductible health plans) and caps on out-of-pocket expenses incurred with HDHPs. According to the IRS, an HSA is “a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur.”
Specifically, to establish an HSA individuals must be covered under a HDHP, must not have other health coverage, must not be enrolled in Medicare, and cannot be claimed as a dependent on another person’s tax return. Contribution limits for 2016 have been adjusted to reflect inflation, including cost-of-living increases. In 2016, the annual limitation on HSA deductions for an individual with self-only coverage will be $3,350. The annual limitation on HSA deductions for an individual with family coverage will be $6,750.
The IRS also announced minimum deductibles for HDHPs for 2016, which are $1,300 for individuals with self-only coverage and $2,600 for individuals with family coverage. Higher limits on annual out-of-pocket expenses for HDHPs were also announced*. In 2016, out-of-pocket expenses, such as copayments and deductible costs, cannot exceed $6,550 for individuals with self-only coverage, and cannot exceed $13,100 for family coverage.
For more information about HSAs and HDHPs, please contact us.
* ACA limits differ
The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose