Guidance for health savings account 2016 contributions were recently released by the Internal Revenue Service. The maximum allowable contribution individuals can make to their HSA is increasing by $100 in 2016 to $6,750 for those who have family coverage under a high deductible health plan. This means that more of an employee’s salary can go untaxed by the government if put toward a high deductible health plan.
Although, the 1.5 percent increase only applies to family coverage. Those with individual coverage remain with a $3,350 contribution limit, same as last year.
HSAs while paired with a HDHP are tax-advantaged accounts to which employees and employers may contribute funds for employees’ health benefit expenses. Individuals can claim tax deductions up to the limits for contributions they make to the accounts when filing their annual income tax returns.
Additionally, the IRS is making some inflation adjustments in 2016 to the dollar amounts it uses to define HDHPs.
Most people are concerned with their deductible. The deductibles are not changing for 2016. They remain at a minimum of $2,600 for family coverage and $1,300 for individual coverage. The change comes in the form of their out-of-pocket expenses. Those with family coverage will have an out-of-pocket maximum of $13,100 and those with individual coverage will be at $6,550.
A little more than last year’s out-of-pocket limits, which were $12,900 for families and $6,450 for individuals. These new numbers can be communicated to employees or plan members during open enrollment.
(Source: Healthcare Trends Institue http://www.evolution1.com/healthcare-trends-institute/hsa-contribution-levels-and-high-deductible-health-plan-limits-set-for-2016/)