Revenue Procedure 2019-25 was issued by the IRS on May 28, 2019 setting new dollar limitations for Health Savings Accounts (HSAs) and high-deductible health plans (HDHPs) for 2020.
HSAs are subject to annual aggregate contribution limits (i.e., employee and dependent contributions plus employer contributions). HSA participants age 55 or older can contribute additional catch-up contributions.
Additionally, in order for an individual to contribute to an HSA, he or she must be enrolled in an HDHP meeting minimum deductible and maximum out-of-pocket thresholds. The contribution, deductible and out-of-pocket limitations for 2020 are as follows:
Maximum HSA Contribution: $3,550 Self-Only / $7,100 Family
Catch-Up Contribution Limit: $1,000
Minimum HDHP Deductible: $1,400 Self-Only / $2,800 Family
HDHP Out-of-Pocket Maximum: $6,900 Self-Only / $13,800 Family
The Affordable Care Act (ACA) also applies an out-of-pocket maximum on expenditures for essential health benefits. Keep in mind that the ACA and HDHP out-of-pocket maximums differ as follows:
ACA out-of-pocket maximums are higher as they use a different methodology than the IRS.
ACA requires the family out-of-pocket maximum to include an "embedded" self-only maximum on essential health benefits.
2020 ACA Out-of-Pocket Limitations
Self-Only: $8,150
Family: $16,300
If you are currently an employer that provides a HDHP option to employees, keep these new limits in mind when planning for the 2020 benefit plan year and make sure to review plan communications to ensure that the appropriate limits are reflected.