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IRS Announces Inflation-Adjusted HSA Numbers for 2021

 

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.

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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