Many individuals choose to participate in a high-deductible health plan (HDHP) offered by either their company or on the healthcare exchange to save money on insurance premiums. Most are associated with a health savings account (HSA) so the participant can contribute pre-tax dollars to cover some of their out-of-pocket expenses including deductibles, co-payments, and prescription drugs, to name a few. Insurance premiums are excluded as an allowable out-of-pocket expense.
The IRS limits the amount that a person can contribute to a HSA on an annual basis. Yet, the IRS allows participants to take a deduction for contributions made to a HSA that is set-up to help pay for their medical expenses. Both are adjusted annually for inflation.
For 2018, the lower limit annual deductible under a HDHP has increased to $1,350 for self-coverage and $2,700 for family coverage. The upper limit for out-of-pocket expenses has also increased to $6,650 for self-coverage and $13,300 for family coverage.
The annual deduction limit for 2018 is $3,450 for individuals with self-coverage and $6,900 for family coverage. This is a slight increase of $50 and $150 respectively from the 2017 annual limit.
