A health savings account, or HSA, is a great way to save money for medical expenses. If you qualify for an HSA, you get to deduct every dollar in contributions up to the HSA contribution limit. If you pay your medical expenses with an HSA, it ends up that you can deduct every single dollar of medical expenses, instead of just the amount over 10% of your income. In addition, over time, your money grows tax-free inside of the account.
HSA Contribution Limits 2019
The 2019 HSA Contribution limit is $3,500 for an individual, or up to $7,000 for a family. Remember to qualify for an HSA, you have to have a qualifying HDHP (High-Deductible High Health Plan).
HSA Contribution Limits 2020
The IRS recently released the information regarding contributions to an HSA in 2020. Each year, the contribution limit for HSA accounts is adjusted for inflation. This year, inflation was slightly higher for the year, so there was a small increase in the contribution limits for HSA accounts.
For 2020 HSA contributions, the limits will be $3,550 for an individual, or “self-only” high deductible health plan. For someone with family coverage, the limit rises to $7,100, up from $7,000 in 2019.
To qualify as a HDHP in 2020, a plan must have an annual deductible of at least $1,400 for self-only coverage, or $2,800 for family coverage. The out-of-pocket expenses must not exceed $6,900 or $13,800 annually.