In Rev. Proc. 2020-32, the IRS provides the 2021 inflation-adjusted amounts for Health Savings Accounts. These changes are for calendar year 2021:

 

  • The annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,600.
  • The annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,200.
  • A “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage

HSAs are savings account that employees can use with a high-deductible health plan to help cover higher deductibles and copays. There are multiple advantages to such a system. Money in HSAs can be used for a wide range of medical expenses, including — but not limited to — the deductibles under the HDHPs. Qualified medical expenses also include dental services, vision care, prescription drugs, co-pays, psychiatric treatments and other qualified medical expenses not covered by a health insurance plan.

Questions? Contact an MCB Advisor at 703-218-3600 or click here. To review our business planning articles, click here. To review our closely held business articles, click here. To learn more about MCB’s tax practice and our tax experts, click here.

As we have been doing with all coronavirus legislation and SBA guidance during these past few months, we will be sure to update you with any additional insight as soon as possible. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have questions about this or related topics contact an MCB Advisor at 703-218-3600 or click here. 

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@2020

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