The IRS announced the 2021 HSA contribution limits in May in Revenue Procedure 2020-32, as well as minimum deductible and maximum out-of-pocket expenses for the HDHPs (high-deductible health plans) that HSAs must be paired with.
Download our comparison chart: HRA vs. HSA vs. FSA
The annual limit on HSA contributions for 2021 will be $3,600 for self-only and $7,200 for family coverage, which is about a 1.5 percent increase from the 2020 limits. This represents an increase of $50 for self-only coverage and $100 for family coverage compared to 2020.
The table below summarizes 2021 contribution limits:
|HSA contribution limit (company + employee)||$3,600||$7,200|
|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 only contribute up to $2,100.
Individuals who are eligible to contribute to an HSA can make contributions at any point during the 2021 tax year, including up through their federal tax return due date (April 15th of 2022).
How do the new limits and guidelines compare with 2020 limits?
2021 HSA contribution limits went up $50 for individuals with self-only coverage and $100 for individuals with family coverage. This matches the increase from 2019 to 2020 for both self-only and family coverage.
Here’s a chart to compare HSA contributions limits for 2020 and 2021:
|HSA contribution limit (employer + employee)||Self-only: $3,550
|HSA catch up contributions(age 55+)||$1,000||$1,000||No change|
How do 2021 deductibles and out-of-pocket amounts compare?
Minimum deductibles saw no change for 2021. Maximum out-of-pocket amounts increased by $100 for individuals with self-only coverage and by $200 for those with family coverage.
Here’s a chart to compare HSA contribution limits and HDHP guidelines for 2019 and 2020:
|HDHP minimum deductibles||Self-only: $1,400
|HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums)||Self-only: $6,900
HSAs are just one possibility for 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 health reimbursement arrangement (HRA) program. 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.
Take our HRA quiz to see which one fits your organization’s needs best