Advertisement
health savings accounts

HSA Limits and Minimums

Annually adjusted contribution limits and other requirements must be met if you're covering health care costs with a Health Savings Account.

For many people, health savings accounts (HSAs) offer a tax-friendly way to pay medical bills. You can deduct your contributions to an HSA (even if you don't itemize), contributions made by your employer are excluded from gross income, earnings are tax free, and distributions aren't taxed if you use them to pay qualified medical expenses. Plus, you can hold on to the account past your working years and use it tax-free for medical expenses in retirement. All-in-all, HSAs can be a great tool for covering your health care costs.

There are, however, a few HSA limitations and requirements that are adjusted for inflation each year. They apply to the amount you can contribute to an HSA for the year, the minimum deductible for your health insurance plan, and your annual out-of-pocket expenses. If you or your health plan are not in compliance with the restrictions in place for any particular year, then you can say goodbye to the HSA tax savings for that year.

HSA Contribution Limits

Your contributions to an HSA are limited each year. You can contribute up to $3,600 in 2021 if you have self-only coverage or up to $7,200 for family coverage. If you're 55 or older at the end of the year, you can put in an extra $1,000 in "catch up" contributions. However, your contribution limit is reduced by the amount of any contributions made by your employer that are excludable from your income, including amounts contributed to your HSA account through a cafeteria plan.

The 2021 HSA contribution limits are higher than the 2020 amounts. For self-only coverage, you can contribute $50 more in 2021 than you could in 2020. For family coverage, the 2021 limit is $100 higher than the 2020 cap. The table below shows how the contribution limits have increased over the past five years.

Year

Self-Only Coverage

Family Coverage

Catch-Up Contributions

2021

$3,600

$7,200

$1,000

2020

$3,550

$7,100

$1,000

2019

$3,500

$7,000

$1,000

2018

$3,450

$6,900

$1,000

2017

$3,400

$6,750

$1,000

Health Plan Minimum Deductibles

Advertisement - Article continues below
Advertisement
Advertisement - Article continues below

To contribute to an HSA, you must be covered under a high deductible health plan. For 2021, the health plan must have a deductible of at least $1,400 for self-only coverage or $2,800 for family coverage.

The 2021 minimum deductible amounts are the same as the 2020 figures. The following table shows the minimum deductible amounts for the five most recent years.

Year

Self-Only Coverage

Family Coverage

2021

$1,400

$2,800

2020

$1,400

$2,800

2019

$1,350

$2,700

2018

$1,350

$2,700

2017

$1,300

$2,600

Limits on Out-of-Pocket Expenses

The health plan must also have a limit on out-of-pocket medical expenses that you are required to pay. Out-of-pocket expenses include deductibles, copayments and other amounts, but don't include premiums. For 2021, the out-of-pocket limit for self-only coverage is $7,000 or $14,000 for family coverage. According to the IRS, only deductibles and expenses for services within the health plan's network should be used to determine if the limit applies.

As the table below indicates, the health plan out-of-pocket expense limits for HSAs have increased each year from 2017 to 2021 to account for inflation. That includes a $100 jump for self-only coverage and a $200 increase for family coverage from 2020 to 2021.

Year

Self-Only Coverage

Family Coverage

2021

$7,000

$14,000

2020

$6,900

$13,800

2019

$6,750

$13,500

2018

$6,650

$13,300

2017

$6,550

$13,100

Advertisement
Advertisement

Most Popular

11 Dividend-Paying Stocks You Should Think Twice About
dividend stocks

11 Dividend-Paying Stocks You Should Think Twice About

Dividend-paying stocks often can be a store of safety, but 2020 has been difficult on income equities. These 11 picks look like shaky plays despite th…
September 21, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020
Where You Should Invest Now
investing

Where You Should Invest Now

Kiplinger.com senior investing editor Kyle Woodley joins our Your Money's Worth podcast to answer investor questions about tech stocks, the election a…
September 22, 2020

Recommended

Don’t Be Paralyzed by Uncertainty
retirement planning

Don’t Be Paralyzed by Uncertainty

You definitely need a plan, because what’s ahead could be scarier than what’s behind us.
September 21, 2020
Insurance for Long-Term Care at Home
retirement

Insurance for Long-Term Care at Home

In the wake of COVID-wracked nursing homes, increasingly more people are looking at options to age in place with long-term care insurance.
September 17, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020
10 Things You'll Spend More on in Retirement
retirement

10 Things You'll Spend More on in Retirement

From reading materials to debt, the demands on your savings during your golden years might surprise you.
September 16, 2020