IRS Sets 2017 Contribution Limits for Health Savings Accounts

May 3rd 2016
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The annual limit on deductible contributions to a health savings account (HSA) will increase by $50 in calendar year 2017 for individuals with self-only coverage.

The IRS issued Revenue Procedure 2016-28 on April 28, which provides the 2017 inflation-adjusted deduction limitations for annual contributions made to an HSA under Code Section 223.

For 2017, the annual contribution limitation for a person with self-only coverage under a high-deductible health plan is $3,400, up from $3,350 in calendar year 2016.

The annual limit on deductible contributions for a person with family coverage under a high-deductible health plan remains unchanged at $6,750.

According to the IRS, a high-deductible health plan is defined under Section 223 as a health plan with an annual deductible that is “not less than $1,300 for self-only coverage or $2,600 for family coverage.”

Annual out-of-pocket expenses – such as deductibles, copayments, and other amounts that do not include premiums – will have a maximum limit of $6,550 for individuals and $13,100 for families. These amounts remain unchanged from last year.

According to IRS Publication 969, the benefits of an HSA include:

  • You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040.
  • Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
  • The contributions remain in your account until you use them.
  • The interest or other earnings on the assets in the account are tax-free.
  • Distributions may be tax-free if you pay qualified medical expenses.

Related articles:

How Your Clients Can Benefit From Health Savings Accounts
IRS Issues 2016 Deduction Limits for Health Savings Accounts

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