The IRS is out with increased health savings account (HSA) contribution limits for the coming year, and both self-only coverage and family coverage will see increases.
For the calendar year 2022, the annual limitation on deductions for an individual with self-only coverage in an HSA is $3,650, a $50 increase over 2021 limits. For families, it will be $7,300, or a $100 increase of 2021 limits.
Popularity rising
The number of health savings accounts in the U.S. now exceeds 30 million, holding an estimated $82.2 billion in assets at the end of 2020, according to the latest HSA report from Devenir released in early April.
Health savings account asset growth remained strong, increasing to $82.2 billion in assets held in over 30 million accounts, a year-over-year increase of 25% for assets and 6% for health savings accounts for the period ended December 31, 2020.
“Despite the COVID-19 pandemic, a record $42 billion was contributed to health savings accounts during 2020. Account-holders were able to tap their health savings accounts to help cover over $30 billion in medical expenses throughout the difficult year while continuing to accumulate meaningful savings for future medical expenses,” said Jon Robb, SVP of research and technology at Devenir, said in a statement.
A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur.
You must be an eligible individual to qualify for an HSA.
No permission or authorization from the IRS is necessary to establish an HSA. You set up an HSA with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.