IRS Announces HSA Limits for 2016

On May 4, 2015, the Internal Revenue Service (IRS) released Revenue Procedure 2015-30 announcing the annual inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2016. An HSA is a tax-exempt medical savings account employees can use to pay for qualified medical expenses.

To be eligible for an HSA, an employee:

• Must be covered by a qualified high deductible health plan (HDHP).

• May not be enrolled in Medicare.

• May not be claimed as a dependent on someone else’s tax return.

The limits vary based on whether an individual has self-only or family coverage under a HDHP. The rates are as follows:

2016 HSA Contribution Limit

• Single: $3,350 (the limit is unchanged from 2015)

• Family: $6,750 (the limit increases by $100 from the 2015 limit of $6,650)

• Catch-up contributions for those age 55 and older remains at $1,000

2016 HDHP Minimum Deductible

• Single: $1,300 (the limit is unchanged from 2015)

• Family: $2,600 (the limit is unchanged from 2015)

2016 Maximum Out- of-Pocket Expense Limit

• Single: $6,550 (the limit increases by $100 from the 2015 limit of $6,450)

• Family: $13,100 (the limit increases by $200 from the 2015 limit of $12,900)

Employers should review their affected health plans to ensure compliance with the new regulations, update plan documents, and inform employees of the rate changes.

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