IRS releases 2020 health savings account limits

We haven’t even hit the halfway point in this year, but IRS already wants you to turn an eye to 2020, specifically when it comes to your company’s healthcare plan.

If you offer employees the popular high-deductible health plan/HSA combination, you’ll be able to let employees sock more away in their health savings accounts (HSAs) next year to help offset their costs.

IRS just raised limits on almost every HSA category for 2020 in Revenue Procedure 2019-25.

What’s changing and by how much

These are the numbers your staffers and health care plan participants will need when open enrollment rolls around:

• HSA contribution limits (employer + employee): $3,550 for self-only coverage (up $50); $7,100 for families (a $100 increase)
• HDHP minimum deductibles: $1,400 for self-only (up $50); $2,800 for families (up $100)
• HDHP maximum out-of-pocket amounts (deductibles, co-payments, etc., but not premiums): $6,900 for self-only (up $150); $13,800 for families (a $300 jump), and
• HSA catch-up contributions for ages 55+: holds again at $1,000.

And remember, if your company makes a mistake with a contribution, IRS has made it clear there are several instances where you can recoup the money outright.

Time to revisit the benefits of this benefit

Between now and when these new limits go into effect, you probably want to use the time to launch an education blitz on this tool.

Turns out, employees are still not grasping its value. In fact, 4 in 10 employees either are personally struggling or know someone who is to pay medical expenses. That number jumps to 58% for the Millennials in your company.

And most are willing to do some pretty financially risky things to fix it. When faced with medical bills of $5,000 or more, here’s how employees said they’d handle them, according to a recent study by Securian Financial Group:

• 28% would use personal savings
• 21% don’t know what they’d do
• 12% would lean on credit cards.

As for HSAs? They came in a distant fourth. Folks would use the savings vehicle as quickly as they’d tap their 401(k)s.

Sounds like there’s no time to lose – before open enrollment – to clear up any misconceptions and revisit the benefits of this key savings tool.