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IRS Announces 2016 HDHP and HSA Limits

May 06, 2015

Employee Benefits Corporation
May 4, 2015

In Revenue Procedure 2015-30, the IRS has announced the calendar year 2016 inflation adjusted contribution maximum amounts for a health savings account (HSA) and the accompanying high deductible health plan (HDHP) minimum deductible and maximum out-of-pocket (OOP) thresholds.

The maximum HSA contribution for single plan HDHP coverage will remain the same as the 2015 limit of $3,350. The maximum HSA contribution for coverage other than single plan (e.g., employee plus one, family, etc.) will increase to $6,750 from the current 2015 maximum of $6,650. There is no change in the annual catch up additional contribution of $1,000 for individuals age 55 or older.

The HDHP minimum deductibles will remain the same as the 2015 minimums of $1,300 for single plan and $2,600 for family coverage. In addition, the maximum OOP amounts will be $6,550 for single plan and $13,100 for family coverage compared to the 2015 maximum OOPs of $6,450 for single plan and $12,900 for family coverage.

Employers that currently offer HDHPs and allow HSA contributions from their employees to HSA accounts and/or make contributions into their employee’s HSA accounts will want to make sure that their health plan satisfies the HDHP minimum deductible and maximum OOP amounts for 2016 coverage when the health plan renews in 2016.

Also, to comply with the Cost Sharing Limit provision of the Affordable Care Act, an employer’s non-grandfathered health plan cannot impose a maximum OOP on any essential health benefits for a participant that exceeds the maximum OOP allowed for an ACA compliant plan. That maximum was set by the Department of Health and Human Services (HHS) for 2016 at $6,850 per individual.

Consequently, the maximum OOP for single plan HDHP coverage of $6,550 satisfies the 2016 maximum per individual OOP set by HHS. For family HDHP coverage, no one family member can incur more than the per individual HHS maximum OOP of $6,850 while the family aggregate amount cannot exceed the maximum HDHP OOP of $13,100.

Finally, employers that provide a health reimbursement arrangement (HRA) that assists in reimbursing deductible expenses such that the HRA is compatible with employees and/or the employer making HSA contributions need to ensure that the HRA does not reimburse any deductible expenses until the HDHP minimum deductible amounts ($1,300/single, $2,600/family) have been satisfied as participant OOP expenses for any expenses incurred on or after January 1, 2016.

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