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2020 Health Savings Account Limits Announced

June 7, 2019 | Written By: Royal Credit Union Deposit Team

You’ll be able to put a little more in your Health Savings Account in 2020, according to a recent announcement from the IRS. This small increase to the maximum HSA contribution will enable individuals and families to save more for medical expenses. The IRS also outlined a modest increase in the minimum deductible and out-of-pocket maximum for high-deductible health plans.

What is an HSA?

A health savings account provides a tax-advantaged way to save for medical expenses. Only people enrolled in a high-deductible health plan, or HDHP, with specific out-of-pocket maximums and minimum deductibles are eligible. Here’s why using an HSA is smart:

  • Contributions to an HSA are made with tax-free money. You can have part of your paycheck put into your HSA before income taxes are taken out, which also reduces your taxable income. Or you can claim after-tax contributions as a deduction when filing your income taxes.
  • HSAs grow tax free. You won’t pay taxes on any interest earned while the money is in the account. If you have your money in a Royal HSA, our high rates can make for excellent earnings!
  • You don’t pay taxes when you use the funds for qualified medical expenses.
  • HSA funds roll over from year to year. If you don’t use the funds, they stay in the account until you spend them on a qualified expense. There is no required distribution at a certain age, either.
  • The tax advantages and balance rollover make HSAs an attractive option for retirement savings if you can afford not to touch the funds now. You’re more likely to have large medical expenses during the retirement years, so being able to pay for them out of an HSA instead of your 401(k) or IRA can have a big impact on your financial security.

What are the new limits?

Table shows the HSA contribution limits and the difference between 2019 and 2020
  2020 2019 Change
HSA contribution limit
(employer + employee)
Self-only: $3,550
Family: $7,100
Self-only: $3,500
Family: $7,000
Self-only: +$50
Family: +$100
HSA catch-up contributions 
(age 55 or older)
$1,000 $1,000 No Change
HDHP minimum deductibles Self-only: $1,400
Family: $2,800
Self-only: $1,350
Family: $2,700
Self-only: +$50
Family: +$100
HDHP maximum out-of-pocket amounts
(deductibles, co-payments and other amounts, but not premiums)
Self-only: $6,900
Family: $13,800
Self-only: $6,750
Family: $13,500
Self-only: +$150
Family: +$300

Source: IRS, Revenue Procedure 2019-25.

Can I open an HSA at Royal?

  • Yes! Royal offers both Health Savings Account Checking and Health Savings Account Certificate accounts.
  • The checking option earns interest and allows easy access to your funds with a debit card or paper checks. There is no maintenance fee. The interest rate is tiered according to your account balance, so higher balances earn even more.
  • The certificate option is a 12-month certificate that rewards locking in your funds for 12 months with a higher interest rate.

If you would like to learn more about an HSA account at Royal or open an account online, please use the link below!