May 27, 2020
The IRS issued its annual inflation adjustment today for health savings accounts (HAS) for 2021. In
Revenue Procedure 2020-32,
for calendar year 2021, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,600, a $50 dollar increase from this year. For an individual with family coverage under a high deductible health plan
the limitation is $7,200, up from $7,100 in 2020.
For 2021, a “high deductible health plan” is defined 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. The annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage. This year, it can’t exceed $6,900 for self-only coverage or $13,800 for family coverage.
In March, in response to the coronavirus crisis, the IRS said high-deductible health plans can now cover the costs of COVID-19 testing and treatment before the plan deductible is met.
As part of the CARES Act, people can use an HSA or a flexible spending account to pay for over-the-counter drugs and medicine, such as allergy medications and pain relievers, without a doctor’s prescription. That reverses a provision of the Affordable Care Act (ACA) requiring a prescription for such purchases. The CARES Act also allows the use of HSAs for telehealth and other remote care services until Dec. 31, 2021.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at
Richard.Higgins@MCC-CPAs.com
. I can be reached at
Marty.McCarthy@MCC-CPAs.com
. As always, we are happy to help. Have a good Memorial Day weekend.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Sources: IRS and Accounting Today
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
