IRS Releases Dollar Limitations for HSAs and HDHPs

One great benefit many employees take advantage of is a Health Savings Account (HSA). Employees can make tax-free contributions to these savings accounts to pay for qualified medical expenses, such as doctor’s visits and prescription drugs. An added bonus of HSAs is that unspent funds will roll over, year after year, so you can possibly accumulate quite a bit of cash. Both employees and employers can contribute to an employee’s health savings account. However, HSAs are subject to contribution limits, which are set by the IRS each year.

In May 2018, the IRS released the contribution limits for 2019. Employees and employers should be aware of these limitations, which we summarize below.

HAS/HDHP Limitations

As is clear below, the HSA contribution limits have increased modestly:

• The limit for a self-only HSA in 2018 was $3,450. In 2019, this limit goes up to $3,500.
• The limit for a family HSA in 2018 was $6,900. In 2019, this limit goes up to $7,000.

The catch-up contribution for employees aged 55 or older will remain the same at $1,000.

Enrollment in a high deductible health plan (HDHP) is a prerequisite for having an HSA. The IRS also released information on minimum deductibles for HDHPs and out-of-pocket maximums:

• The minimum deductible will remain the same in 2019 for both self-only and family plans: $2,700.
• Out-of-pocket maximums will go up slightly from 2018 to 2019. The maximum for self-only increases from $6,650 to $6,750. The maximum for family plans increases from $13,300 to $13,500.

Affordable Care Act Out-of-Pocket Maximums

Many plans offered on the Obamacare exchanges qualify as high deductible health plans, which can be paired with an HSA. The Affordable Care Act (ACA) also sets a maximum on out-of-pocket expenditures for essential health benefits. Because the Department of Health and Human Services uses a different methodology than the IRS, its out-of-pocket maximums differ. In fact, the out-of-pocket maximums under the ACA are higher:

• The ACA out-of-pocket maximums for self-only plans was $7,350 in 2018 but rises to $7,900 in 2019.
• The ACA out-of-pocket maximums for family plans was $14,700 in 2018 but rises to $15,800 in 2019.

It is important to understand that the ACA individual maximum applies to each individual in a family plan with respect to essential health benefits. This means that if an employee has family coverage but one member reaches the self-only out-of-pocket maximum on essential health benefits, then this family member cannot incur more cost-sharing expenses—even if the family as a whole has not reached the maximum. Both employers and employees need to understand these differences as they review the health plan offerings for 2019.

Speak with an Experienced Employee Benefits Attorney in Chicago

If you have a question about employee benefits, you should speak to an attorney so that you receive accurate legal advice. At Bartolic Law, we meet with clients every day who believe they have been unfairly denied employee benefits. We are experienced at resolving disputes in our client’s favor, but we need to hear from you before we can begin to build your case.

To schedule your free consultation, please contact us today by calling 312-635-1600 or submitting our contact sheet online.