Group News Updates – May 2016


2016 and 2017 HSA Contribution Limits

The contribution limits for various tax advantaged accounts for the following year are usually announced in the fall, except for HSA, which come out in the spring. The IRS announced contribution limits for Health Savings Account (HSA) for 2017. Due to mild inflation and rounding rules, the 2017 HSA contribution limit for family coverage will stay unchanged. The 2017 HSA contribution limit for individual coverage will go up by $50.

HSA Contribution Limits

2016 2017 CHANGE
Individual Coverage $3,350 $3,400 +$50
Family Coverage $6,750 $6,750 none

Age 55 Catch Up Contribution

As in 401k and IRA contributions, you are allowed to contribute extra if you are above a certain age. If you are age 55 or older by the end of year, you can contribute additional $1,000 to your HSA. If you are married, and both of you are age 55, each of you can contribute additional $1,000.

However, because HSA is in an individual’s name — there is no joint HSA even when you have family coverage — only the person age 55 or older can contribute the additional $1,000 in his or her own name. If only the husband is 55 or older and the wife contributes $6,750 to her HSA for their family coverage, the husband has to open a separate account for the additional $1,000. If both husband and wife are age 55 or older, they must have two HSA accounts if they want to contribute the maximum $8,750. There’s no way to hit the maximum with only one account.

The $1,000 additional contribution limit is fixed by law. It’s not adjusted for inflation.

Two Plans Or Mid-Year Changes

The limits are more complicated if you are married and the two of you are on different health plans, or when your health insurance changes mid-year. The insurance change could be due to a job change, marriage or divorce, enrolling in Medicare, birth of a child, and so on.

For those situations, please read HSA Contribution Limit For Two Plans Or Mid-Year Changes.

HDHP Qualification

You can only contribute to an HSA if you have a High Deductible Health Plan (HDHP).

The IRS also defines what qualifies as an HDHP. For 2017, an HDHP with individual coverage must have at least $1,300 in annual deductible and no more than $6,550 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,600 in annual deductible and no more than $13,100 in annual out-of-pocket expenses.

2016 2017 CHANGE
Individual Coverage
min. deductible $1,300 $1,300 none
max. out-of-pocket $6,550 $6,550 none
Family Coverage
min. deductible $2,600 $2,600 none
max. out-of-pocket $13,100 $13,100 none

Source: IRS Rev. Proc. 2016-28

By: Harry Sit 4/29/2016