IRS Releases 2016 HSA Limits & Specifications

IRS Releases 2016 HSA Limits & Specifications

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IRS Rev. Proc 2015-30 – increases the Health Savings Account (HSA) maximum annual contribution for 2016 by $100 for families and leaves the single (Employee-Only) contribution at 2015’s level.

Corresponding health plans remain the same.

The corresponding HDHP plan (per IRC 223(c)(2)(A)) must be 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 Maximums Increase

The annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage (a $100 increase from 2015’s level) or $13,100 for family coverage (a $200 increase from 2015’s level).

  • Note: 2016 HDHPs with HSA cannot have an OOP Max (Out Of Pocket Maximum) greater than $6,550/individual and $13,100/family, however, non HDHP-HSA plans can have a 2016 OOP Max of $6,850/individual and $13,700/family since PPACA-compliant-plans are no longer directly indexed to HDHP-HSA plans, but are separately indexed from now on*.

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Flashback – Footnote & Reminder: In 2014, the HDHP-HSA OOP Max limit matched the PPACA OOP Max limit applicable to all non-Grandfathered group health plans. However, that is no longer the case for plan years beginning on/after 1/1/2015. HHS announced that 2015’s PPACA OOP Max will be $6,600 for self-only coverage and $13,200 for family coverage.

This change happened because the PPACA limits are indexed to the “premium adjustment percentage” (the percentage (if any) by which the average per capita premium for health insurance coverage in the United States for the preceding calendar year exceeds such average per capita premium for 2013. Whereas the HDHP-HSA limits are subject to a different a COLA (Cost-Of-Living Adjustment) based on the Consumer Price Index for All-Urban Consumers (CPI-U).

Therefore, a non-Grandfathered HDHP-HSA will need to comply with the lower of the two applicable out-of-pocket limits. For 2015, this means that a non-grandfathered HDHP’s out-of-pocket maximums cannot exceed $6,450/$12,900 based on the lower IRC § 223 HDHP limits. A non-grandfathered group health plan that is not an HDHP will be subject only to the higher $6,600/$13,200 PPACA out-of-pocket maximum limits. Grandfathered non-HDHP group health plans are not required to impose an out-of-pocket maximum of any amount.  For 2016, this means that a non-grandfathered HDHP’s out-of-pocket maximums cannot exceed $6,550/$13,100 based on the lower IRC § 223 HDHP limits. A non-grandfathered group health plan that is not an HDHP will be subject only to the higher $6,850/$13,700 PPACA out-of-pocket maximum limits. Grandfathered non-HDHP group health plans are not required to impose an out-of-pocket maximum of any amount.

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