On May 28, 2019, the Internal Revenue Service (IRS) announced increases to health savings account (HSA) limits for 2020. The annual limit on deductible contributions will increase by $50 to $3,550 for individuals with self-only coverage.  For all other coverage levels, the limit will increase by $100 to $7,100.

HSAs may be used only in conjunction with a high-deductible health plan (HDHP).  For 2020, the minimum deductible to qualify as a HDHP will also increase by $50 for individuals with self-only coverage and $100 for all other coverage levels to $1,400 and $2,800, respectively.  HSAs allow participants to make pre-tax contributions, reducing their taxable income for the year.  These contributions can be invested and grow tax-free.  HSAs are then used for out-of-pocket qualified medical expenses tax-free. 

Annual out-of-pocket expense limits will increase as well.  The limit for individual coverage will increase to $6,900 (from $6,750 in 2019) and family coverage limit will increase to $13,800 (from $13,500 in 2019).

For more information, please refer to the IRS Bulletin at https://www.irs.gov/pub/irs-irbs/irb19-22.pdf.