2021 HSA Limits
Contribution Limits:
$3,600 Individual (increased from $3,550 in 2020)
$7,200 Family (increased from $7,100 in 2020)
Additional $1,000 Catch-up Contribution for those 55 or older
Minimum/Maximum Deductibles for HDHP:
$1,400/$7,000 Individual
$2,800/$14,000 Family
What is an HSA? A Health Savings Account (HSA) is a tax-exempt type of savings account that allows you to pay for or reimburse qualifying medical expenses you incur. Local banks and other online trustees offer HSA type accounts.
May anyone set up an HSA? No. You must have a high deductible health plan (HDHP) in order to be eligible to establish an HSA.
What are the benefits of an HSA? Contributions are tax deductible (or excluded from gross income if made by an employer). HSA contributions have similar tax benefits as Traditional IRA contributions. Interest and earnings on the account are tax free. Monies in the account roll over year to year. You own the account; your employer does not. Distributions are tax free if used for qualifying medical expenses. Your HSA can also be another advantageous component of your retirement portfolio.
For more information, see the IRS’s Rev. Proc. 2020-32.