In Rev Proc 2019-25, the IRS recently announced the inflation adjustments that will apply to the deductions on contributions to a Health Savings Account (HSA) for 2020. This Rev. Proc. adjusts the amounts set forth in Internal Revenue Code §233.
§233 allows eligible individuals who participate in a High Deductible Health Plan (HDHP) to deduct contributions made to their HSA – a trust created or organized in the U.S. as a health savings account used exclusively for paying qualified medical expenses. Here is a summary of the adjustments relating to the new limits:
- For calendar year 2020, the annual limitation on deductions for an individual with self-only coverage under a HDHP is $3,550. (A $50 increase from 2019). §223(b)(2)(A)
- For calendar year 2020, the annual limitation on deductions for and individual with family coverage under a HDHP is $7,100. (A $100 increase from 2019). §223(b)(2)(B)
- For calendar year 2020, a “High Deductible Health Plan” (HDHP) 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 $6,900 for self-only coverage or $13,800 for family coverage. §223(c)(2)(A).
Please consult your Henry + Horne tax professional for questions or assistance.