Small Business Employee Benefits and HR Blog

2020 HSA contribution limits

November 29, 2019
2020 HSA contribution limits

A health savings account (HSA) is a tax-advantaged savings account a family or individual can use to pay for qualified medical expenses. HSAs are paired with a high-deductible health plan (HDHP) and have an annual contribution limit. Each year, the IRS adjusts the guidelines regarding HDHPs and HSA contribution limits.

In this post, we’ll discuss HSA contribution limits and HDHP guidelines for 2020.

HSA contribution limits for 2020

The IRS released the 2020 HSA guidelines through Revenue Procedure 2019-25 on May 28, 2019.

In 2020, the following annual limits apply to HSA contributions.

  Self-only Family
HSA contribution limit (company + employee) $3,550 $7,100
HSA catch up contributions(age 55+) $1,000 $1,000

Contribution limits are set based on the calendar year, meaning allowable contributions are prorated by the number of months an individual is eligible to contribute to an HSA. For example, individuals with self-only coverage who are HSA eligible for seven months during the 2020 tax year can contribute up to $1,750.

Individuals who are eligible to contribute to an HSA, can make contributions at any point during the 2020 tax year, including up through their federal tax return due date.

HDHP guidelines for 2020

To be eligible to contribute to an HSA, individuals must have coverage under an HSA-eligible high-deductible health plan (HDHP). The guidelines for HDHP qualification are adjusted each year according to deductible and maximum out-of-pocket limits.

The IRS requires health insurance coverage to reflect the following amounts to qualify as an HDHP in 2020.

  Self-only Family
HDHP minimum deductible $1,400 $2,800
HDHP maximum out-of-pocket amount  $6,900 $13,800

It’s important to know that not every HDHP is HSA eligible. Besides meeting the deductible and out-of-pocket requirements, an eligible policy can’t offer any benefit beyond preventive care before meeting the annual deductible.

How do the new limits and guidelines compare with 2019 limits?

2020 HSA contribution limits went up $50 for individuals with self-only coverage and by $100 for individuals with family coverage, compared with 2019 limits. This is in line with the previous year’s increase of the same amount for self-only and family coverage.

Minimum deductibles on HDHPs increased $50 for self-only coverage and $100 for family coverage from 2019. Maximum out-of-pocket amounts increased by $150 for individuals with self-only coverage and by $300 for those with family coverage.

Here’s a chart to compare HSA contribution limits and HDHP guidelines for 2019 and 2020: 

  2020 2019 Change
HSA contribution limit Self-only: $3,550
Family: $7,100
Self-only: $3,500
Family: $7,000
Self-only: +$50
Family: +$100
HSA catch-up contributions $1,000 $1,000 No change
HDHP minimum deductibles Self-only: $1,400
Family: $2,800
Self-only: $1,350
Family: $2,700
Self-only: +$50
Family: +$100
HDHP maximum out-of-pocket amounts Self-only: $6,900
Family: $13,800
Self-only: $6,750
Family: $13,500
Self-only: +$150
Family: +$300

HSAs are just one consideration of a comprehensive health benefit

HSAs are an increasingly popular savings tool, and small business contributions toward their employees’ HSAs can be a valuable health benefit.

HSAs are even more valuable when considered as part of a personalized benefits program like an HRA. With an HRA, small businesses choose an allowance of tax-free money to make available to employees. The employees are then reimbursed for the health care services they need and want up to the allowance.

Check out our additional resources to learn more about HSAs and how they can work inside a comprehensive and personalized health benefit program.

Want to offer an HRA and an HSA?
Learn more with our compatibility guide.
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