IRS: 2020 HSA Contribution Limits Announced
From the IRS, from the link above: “Annual contribution limitation. For calendar year 2020, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,550. For calendar year 2020, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,100.
High deductible health plan. For calendar year 2020, a “high deductible health plan” is defined under § 223(c)(2)(A) 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.”
Every year, medical inflation grows faster than overall inflation. Even with the annual increases built into the HSA statute, the pace of medical inflation will continue to erode the HSA contribution increases by the amount that medical inflation is in excess of overall inflation. For example, according to the Federal Reserve Economic Data, “FRED,” published by the Federal Reserve of St. Louis: “in the past 20 years, in the regime of stable inflation, headline CPI has grown at an average annual rate of 2.2%, whereas the price level of medical care has grown at an average annual rate of 3.6%—about 70% faster.” Therefore, it’s important to continue to urge Congress to increase HSA contribution, for many reasons, but the continued degradation of spending power of the HSA due to inflation is one of the most important reasons.