The IRS recently released the 2016 annual deduction limits for a health savings account (HSA). These limits are typically adjusted each year for inflation.
The 2016 limits are $3,350 for an individual with self-only coverage and $6,650 for an individual with family coverage. Such deductible contributions can only be made to an HSA that is maintained in conjunction with a high-deductible health plan (HDHP).
An HDHP plan is defined as a plan with an annual deductible of $1,300 or more for self-only coverage or $2,600 or more for family coverage. The corresponding maximum out-of-pocket expenses are $6,550 and $13,100, respectively.
Health savings accounts continue to be powerful tools in combating the rise in health costs especially for young healthy people. Employers should continue to evaluate their effectiveness as part of an overall health benefits strategy.