January 2020

The self-only out-of-pocket max has increased by $100 to $6,750, while the family out-of-pocket max has increased $200 to $13,500. This results in more plans with very high deductibles being included in the HDHP definition. The IRS announced their contribution limits, deductible and out-of-pocket information for 2019. Contributing the maximum allowed by law each year lets you get the most tax savings.

$19,000: 401(k) pretax contribution limits

Like most tax-advantaged accounts, there are legal limits to how much you can contribute to an HSA each year. The maximum contribution limits for 2025 got a significant boost over last year. For 2025, you can contribute a maximum of $4,300 for self-only coverage and up to $8,550 for family coverage.

Health Reimbursement Arrangements:

In addition, the family HSA contribution limit has increased by $100 over 2018. These are solid increases especially compared to the lean years of 2016 and 2017. It seems the IRS is giving the taxpayers a (small) break since these contribution limits determine the deduction your HSA allows. This marks the 2nd year where we have strong increases in both the self-only and family contribution limits.

$2,700: HDHP minimum deductible for family

Health savings accounts offer taxpayers one of the most favorable ways to save money. For calendar year 2019, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan is $3,500. For calendar year 2019, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,000, up from the recently reset $6,900 limit for 2018. The limits on annual deductibles are also subject to annual inflation adjustments. For 2019, the lower limit on the annual deductible for an HDHP is $1,350 for self-only coverage and $2,700 for family coverage, both unchanged from 2018.

Why HSAs are a great deal

First off, all contributions are considered “pre-tax,” so every dollar you contribute reduces your taxable income. Any contributions an employer makes to your HSA (including contributions made through a cafeteria plan) are also excluded from your gross income. Yet the hidden benefit to HSAs comes from the tax-free growth that they offer.

For example, those who will be 55 by the end of 2019 and have self-only coverage will be able to contribute and deduct up to $4,500 with an HSA. ADP is committed to assisting businesses with increased compliance requirements resulting from rapidly evolving legislation. Our goal is to help minimize your administrative burden across the entire spectrum of employment-related payroll, tax, HR and benefits, so that you can focus on running your business. This information is provided as a courtesy to assist in your understanding of the impact of certain regulatory requirements and should not be construed as tax or legal advice.

The 100+ person team (kidding?) at the IRS has cranked their magic number machine and released their 2019 HSA limits and definitions. This includes the 2019 HSA Contribution Limits as well as the 2019 HDHP Definitions for Minimum Annual Deductible and Out of Pocket Maximum. These amounts govern 1) how much can be contributed to an HSA and 2) what qualified as an HSA for 2019. Overall, they have done a good job and it will be a good year for HSA savers as well as new people looking to establish an HSA for the first time. The IRS sets limits each year for maximum contributions to each type of account-based benefit.

• Overall, they have done a good job and it will be a good year for HSA savers as well as new people looking to establish an HSA for the first time.
• By matching the contribution limits to the out-of-pocket maximums, the bill would let those with the means to save more handle all of their healthcare expenses through an HSA.
• Health savings accounts (HSAs) and Medicare Advantage Medical Savings Accounts (MSAs) are individual accounts offered or administered through Optum Bank®, Member FDIC, a subsidiary of Optum Financial, Inc.
• If you withdraw money from your HSA for non-medical expenses, the 20% penalty no longer applies.
• HSAs offer substantial benefits for managing health care expenses and building retirement savings.
• As long as you use money on qualifying medical expenses, then all the income and gains that your HSA investments produce is free of federal income tax.

IRS 2019 Plan Maximums and Limits

We know navigating intricate healthcare financial landscape demands precision, and we are here to provide the clarity you seek with the answers to some of our most frequently asked questions. At AHCP, we continue to believe that HSAs will be a big part of the solution going forward. Since 1937, we’ve guided clients through informed risk management decisions, providing insurance, surety, and employee benefits solutions tailored to their unique needs.

HSAs are designed to help people save for healthcare expenses by using high-deductible health insurance policies. These policies, known as HDHPs for short, typically feature extremely low monthly premiums in exchange for coverage that only kicks in after you pay a sizable amount toward your own healthcare costs. Every year, the guidelines for HSAs change modestly, and those who want to take full advantage of the accounts need to update their plans accordingly. Your health plan deductible is the sum you must pay for medical expenses before your insurance kicks in. For 2025, the deductible must be at least $1,650 for an individual and $3,300 for a family.

• Talk to your financial advisor or CPA to determine the best approach for your HSA.
• The IRS has announced 2019 inflation-adjusted amounts for health savings accounts (HSAs) and high-deductible health plans (HDHPs), reflecting the switch to chained CPI for annual adjustments effective in 2018.
• For nearly a century, we’ve built a reputation for client-centric consulting and strategic insurance solutions in the Pacific Northwest and beyond.
• For the latest on how federal and state tax law changes may impact your business, visit the ADP Eye on Washington Web page located at /regulatorynews.
• Legislation that passed the House earlier this year would potentially let savers set aside an additional $3,250 for self-only coverage or $6,500 for family coverage.
• Bills improving HSA’s were introduced during the first 2 years of Trump’s term, during which he held a majority in both houses, but no one could agree on anything and no new laws were passed.

Use this information as a reference, but please visit IRS.gov for the latest updates. Catch-up contributions are also allowed for those who are 55 or older. If you qualify, you can add $1,000 to the applicable contribution limit above.

This is especially true in an environment of rising health care costs. HSAs have also attracted the attention of lawmakers who 2019 hsa contribution and coverage limits want to expand their use. Legislation that passed the House earlier this year would potentially let savers set aside an additional $3,250 for self-only coverage or $6,500 for family coverage. By matching the contribution limits to the out-of-pocket maximums, the bill would let those with the means to save more handle all of their healthcare expenses through an HSA.