HSA Contribution Limits and Other Requirements

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It’s that time of year when workers are asked to pick their health benefit options for 2022 during an open enrollment period. If your employer offers a health savings account (HSA) option as part of its benefits package, don’t dismiss it out of hand just because you’re not familiar with how they work. After doing a little research, you might discover that an HSA is the way to go.

For many people, HSAs offer a tax-friendly way to pay medical bills. You can deduct your contributions to an HSA (even if you don’t itemize), contributions made by your employer are excluded from gross income, earnings are tax free, and distributions aren’t taxed if you use them to pay qualified medical expenses. Plus, you can hold on to the account when you’re no longer working for your current employer and use it tax-free for medical expenses in at a different job or during retirement. All-in-all, HSAs can be a great tool for covering your health care costs.

There are, however, a few HSA limitations and requirements that are adjusted for inflation each year. They apply to the amount you can contribute to an HSA for the year, the minimum deductible for your health insurance plan, and your annual out-of-pocket expenses. If you or your health plan are not in compliance with the restrictions in place for any particular year, then you can say goodbye to the HSA tax savings for that year.

HSA Contribution Limits

Your contributions to an HSA are limited each year. You can contribute up to $3,650 in 2022 if you have self-only coverage or up to $7,300 for family coverage. If you’re 55 or older at the end of the year, you can put in an extra $1,000 in “catch up” contributions. However, your contribution limit is reduced by the amount of any contributions made by your employer that are excludable from your income, including amounts contributed to your HSA account through a cafeteria plan.

If you’re thinking of adjusting your 2021 HSA contributions for the last few months of this year, note that the 2021 HSA contribution limits are lower than the 2022 amounts. For self-only coverage, you can contribute $50 less in 2021 than you can in 2022. For family coverage, the 2021 limit is $100 lower than the 2022 cap. The table below shows how the contribution limits have increased over the past few years.

Year

Self-Only Coverage

Family Coverage

Catch-Up Contributions

2022$3,650$7,300$1,000

2021

$3,600

$7,200

$1,000

2020

$3,550

$7,100

$1,000

2019

$3,500

$7,000

$1,000

2018

$3,450

$6,900

$1,000

2017

$3,400

$6,750

$1,000

Health Plan Minimum Deductibles

To contribute to an HSA, you must be covered under a high deductible health plan. For 2022, the health plan must have a deductible of at least $1,400 for self-only coverage or $2,800 for family coverage.

The 2022 minimum deductible amounts are the same as the 2021 figures. The following table shows the minimum deductible amounts for the six most recent years.

Year

Self-Only Coverage

Family Coverage

2022$1,400$2,800

2021

$1,400

$2,800

2020

$1,400

$2,800

2019

$1,350

$2,700

2018

$1,350

$2,700

2017

$1,300

$2,600

Limits on Out-of-Pocket Expenses

The health plan must also have a limit on out-of-pocket medical expenses that you are required to pay. Out-of-pocket expenses include deductibles, copayments and other amounts, but don’t include premiums. For 2022, the out-of-pocket limit for self-only coverage is $7,050 or $14,100 for family coverage. According to the IRS, only deductibles and expenses for services within the health plan’s network should be used to determine if the limit applies.

As the table below indicates, the health plan out-of-pocket expense limits for HSAs have increased each year from 2017 to 2022 to account for inflation. That includes a $50 jump for self-only coverage and a $100 increase for family coverage from 2021 to 2022.

Year

Self-Only Coverage

Family Coverage

2022$7,050$14,100

2021

$7,000

$14,000

2020

$6,900

$13,800

2019

$6,750

$13,500

2018

$6,650

$13,300

2017

$6,550

$13,100