The Internal Revenue Service issued its annual inflation adjustment Wednesday for health savings accounts for 2021, at a time when many taxpayers are worried about their health in the midst of the novel coronavirus pandemic.
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For 2021, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,200, up from $7,100 in 2020.
For 2021, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage (this year, it can’t exceed $6,900 for self-only coverage or $13,800 for family coverage).
In March, in response to the coronavirus crisis, the IRS said high-deductible health plans can now cover the costs of COVID-19 testing and treatment before the plan deductible is met (
As part of the CARES Act that was signed into law at the end of March, Congress is also now allowing people to use an HSA or a flexible spending account to pay for over-the-counter drugs and medicine, such as allergy medications and pain relievers, without a doctor’s prescription. That reverses a provision of the Affordable Care Act that required a prescription for such purchases. The CARES Act also allows the use of HSAs for telehealth and other remote care services until Dec. 31, 2021.
