The Internal Revenue Service recently announced cost-of-living adjustments to the applicable dollar limits for health savings accounts and high-deductible health plans for 2021. Some of the dollar limits currently in effect for 2020 will change for 2021.
Recently, the Internal Revenue Service (IRS) announced (see Revenue Procedure 2020-32) cost-of-living adjustments to the applicable dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2021. Many of the dollar limits currently in effect for 2020 will change for 2021. The HSA catch-up contribution for individuals age 55 or older will not change as it is not subject to cost-of-living adjustments.
The table below compares the applicable dollar limits for HSAs and HDHPs for 2020 and 2021.
HEALTH AND WELFARE PLAN LIMITS
HDHP – Maximum annual out-of-pocket limit (excluding premiums)
HDHP – Minimum annual deductible
HSA – Annual contribution limit
Catch-up contributions (age 55 and older)
Plan sponsors should update payroll and plan administration systems for the 2021 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, such as open enrollment and communication materials, plan documents, and summary plan descriptions.
For further information about applying the new HSA and HDHP plan limits for 2021, please contact your regular McDermott lawyer or one of the authors above.