FSA and HSA Limits for 2021

FSA and HSA Limits for 2021

| October 23, 2020
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The Internal Revenue Service released inflation-adjusted contribution limits for health savings accounts (HSA) for 2021. For calendar year 2021, the annual limitation on deductions under §223(b)(2)(A) for an individual with coverage under a high deductible health plan is $3,600—up $50 from $3,550 in 2020. Whereas the new limits for an individual with family coverage under a high deductible health plan is $7,200—and increase of $100 from $7,100 for 2020.

For calendar year 2021, the IRS defines a “high deductible health plan” as a health plan with an annual deductible that is not less than $1,400 for individual coverage or $2,800 for family coverage. The annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) must not exceed $7,000 for self-only coverage or $14,000 for family coverage.

Employer HSA contributions aren’t treated as taxable income but do count toward an employee’s annual contribution limit.

Meanwhile, Flexible Spending Account (FSA) limits for 2021 are not expected to increase. The 2021 Health Care FSA Limit for is expected to continue to have an annual maximum of $2,750 per plan year. As a result, the maximum Health Care FSA rollover limit of $550 will remain unchanged for plans that begin or renew on or after January 1, 2021.
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