James D. Lynch
HSA contribution limits increase for 2021
Health savings account (HSA) contribution limits for 2021 are increasing by $50 for self-only coverage and $100 for family coverage.
An individual with self-only coverage under a qualifying high-deductible health plan (i.e. a health plan with a deductible of at least $1,400) can contribute up to $3,600 to their HSA in 2021. This is up from $3,550 in 2020.
For those with family coverage under a health plan with a deductible of at least $2,800, the 2021 annual limit on HSA contributions will be $7,200. This is up from $7,100 in 2020.
The HSA catch-up contribution for those aged 55 and older remains unchanged at $1,000. If both spouses are 55 or older, both spouses may make $1,000 catch-up contributions as long as they are HSA eligible (i.e. they have a high deductible health plan and are not enrolled in Medicare).
An HSA is a tax-friendly way to pay medical bills. Contributions to an HSA are tax-deductible, even if you don't itemize. Contributions made by your employer are excluded from gross income. Interest earned on HSA accounts is not taxed. Withdrawals are not taxed as long as the money is used to pay for qualified medical expenses.