HSA Limits Increase for 2022May 18, 2021
Health savings account limits have changed for 2022, here’s what you should know.
The Internal Revenue Service has announced the annual inflation-adjusted limits on deductions for contributions to a health savings account (HSA) allowed for taxpayers with family coverage under a high-deductible health plan (HDHP) for calendar year 2022. What has changed? Let’s dive in.
What is a health savings account (HSA)?
A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the U.S. who are enrolled in a high deductible health plan. HSAs are essentially like personal savings accounts used for qualified healthcare expenses. The benefits of HSAs are that the contributions employees make are tax deductible, employees don’t have to use HSA funds until they need them, and money rolls over from year to year and continues to earn interest.
What has changed for 2022?
Individuals who participate in an HDHP are permitted a deduction for contributions to HSAs set up to help pay their medical expenses. The contribution deduction limit is subject to an annual inflation adjustment.
The 2022 annual limit on deductible contributions is $3,650 for individuals with self-only coverage under an HDHP. This is a $50 increase from 2021. The limit is $7,300 for family coverage for 2022 (a $100 increase from 2021). Individuals age 55 and older are allowed an additional $1,000 contribution before the end of the tax year.
Note that the limits on annual deductible are also subject to annual inflation adjustments. The lower limit on the annual deductible for an HDHP is $1,400 for self-only coverage and double that for family coverage, unchanged from 2021. The upper limit has increased however--$7,050 for self only coverage for out of pocket expenses, and $14,100 for family coverage for out of pocket expenses (increased from $7,000 and $14,000).
Did the CARES Act change HSAs?
As part of the Coronavirus Aid, Response and Economic Security (CARES) Act, taxpayers can use HSAs, health reimbursements arrangements (HRAs) or health flexible spending account (FSAs) to pay for over the counter medications without a prescription.
Questions on the new contribution limits? We can help.