IRS Sets Health Savings Account Limits for 2020

The Internal Revenue Service (IRS) announced on May 28, 2019, the increasing out-of-pocket dollar limits for Group plans for the 2020 calendar year. Updates were also made for the rising contribution, deductible and out-of-pocket limits for high deductible plans (HDHPs) and health savings accounts (HSAs). These changes will affect both self-coverage plans (for one individual) and family coverage plans (for two or more individuals). As you prepare for open enrollment, check out the adjusted dollar limits for 2020 below.

2020 Group Plans Maximum Out-of-Pocket Limits

For Group health insurance, either through an Association Health Plan (AHP), MEWA, or PEO, annual out-of-pocket expenses are increasing from 2019. Out-of-pocket expenses exclude premiums, but include co-payments, deductibles and coinsurance amounts. Here are the 2020 maximum out-of-pocket limits:

• $8,150 for self-coverage (compared to $7,900 in 2019)
• $16,300 for family coverage (compared to $15,800 in 2019)

Note: The annual out-of-pocket maximum requirement doesn’t apply to transitional relief and retiree plans.

2020 HDHPs and HSAs Limits

2020 HSA minimum deductible
Deductibles, which are the amounts paid out-of-pocket by the policy holder, will increase slightly in 2020:
• $1,400 for non-embedded self-only coverage (compared to $1,350 in 2019)
• $2,800 for non-embedded family coverage (compared to $2,700 in 2019)
• $2,800 for embedded individual and family coverage (compared to $2,700 in 2019)

2020 HDHP out-of-pocket maximum
The annual out-of-pocket expenses for an HDHP in 2020 will increase from 2019. Compared to last year, those with self-only coverage will pay up to $150 more in out-of-pocket expenses, while out-of-pocket maximum expenses will increase by $300 for those with family coverage. See below:
• $6,900 for self-only coverage (compared to $6,750 in 2019)
• $13,800 for family coverage (compared to $13,500 in 2019)

2020 HSA contribution limits
HSA contribution limits will modestly increase in 2020, as they are adjusted every year for inflation. This means those with individual plans will be able to contribute $50 more in 2020, while those with family plans will be able to contribute $100 more. Employer HSA contributions also count toward these annual contribution limits. The catch-up contribution limit for those over the age of 55 is fixed by statute and will remain at $1,000. Here are the 2020 HSA contribution limits:
• $3,550 for self-only coverage (compared to $3,500 in 2019)
• $7,100 for family coverage (compared to $7,000 in 2019)

“Health care costs continue to outpace inflation, which means Americans will spend more out-of-pocket each year,” Shobin Uralil, co-founder and chief operating officer of HSA services firm Lively told the Society of Human Resources Management. “These contribution limits will help increase the value of HSAs to individuals and families. We’re seeing growth in HSAs as a vehicle not only for health savings in the near term, but for anticipated costs in retirement as well.”

Unlike flexible spending accounts (FSAs), the money you contribute to an HSA never expires. If you don’t spend it during the year you contributed, you can keep rolling it over, even if you change employers.

Prepare for Open Enrollment

As you prepare for open enrollment, it’s important for Brokers to educate Employers and their employees on the value of these offerings, so they can not only utilize them, but also cut down on health care costs.

In addition to education, health insurance software like FormFire can further ensure open enrollment goes smoothly for your clients. Our all-in-one solution streamlines the quoting process, while providing a shopping-like experience to make comparing and selecting health plans easier than ever. Contact FormFire today if you have questions or would like to learn more about our product solutions.

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