IRS Issues 2016 HSA Contribution Limits
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IRS Issues 2016 HSA Contribution Limits
Allowable contributions for family coverage up, along with out-of-pocket maximum for high-deductible plans

By Stephen Miller, CEBS  5/6/2015
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Update: For 2017, health savings account contribution limits for individual (self-only) coverage will increase by $50; most other HSA-related limits, including for HSAs linked to family coverage, remain unchanged from 2016. See the SHRM Online article IRS Sets 2017 HSA Limits.

The Internal Revenue Service (IRS) announced limits for 2016 on contributions to health savings accounts (HSAs) and for out-of-pocket spending under high-deductible health plans (HDHPs) linked to them.

In Revenue Procedure 2015-30, issued May 5, 2015, the IRS provided the inflation-adjusted HSA contribution and HDHP minimum deductible and out-of-pocket limits, effective for calendar year 2016. The higher rates reflect a cost-of-living adjustment and rounding rules under Internal Revenue Code Section 223.

A comparison of the 2016 and 2015 limits is shown below:

Contribution and Out-of-Pocket Limits for Health Savings Accounts
and High-Deductible Health Plans


For 2016

For 2015


HSA contribution limit (employer + employee)

Individual: $3,350

Family: $6,750

Individual: $3,350

Family: $6,650

Individual: no change

Family: +$100

HSA catch-up contributions (age 55 or older)*



No change**

HDHP minimum deductibles

Individual: $1,300

Family: $2,600

Individual: $1,300

Family: $2,600

Individual: no change

Family: no change

HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums)

Individual: $6,550

Family: $13,100

Individual: $6,450

Family: $12,900

Individual: +$100

Family: +$200

* Catch-up contributions can be made any time during the year in which the HSA participant turns 55.

** Unlike other limits, the HSA catch-up contribution amount is not indexed; any increase would require statutory change.

The lack of increases for individual contributions and modest increases for family contributions reflect the government's calculation of a continuing tepid inflation rate.

Penalties for Nonqualified Expenses

Those under age 65 (unless totally and permanently disabled) who use HSA funds for nonqualified medical expenses face a penalty of 20 percent of the funds used for such expenses. Funds spent for nonqualified purposes are also subject to income tax.

Dependent Children

While the Affordable Care Act allows parents to add their adult children (up to age 26) to their health plans, the IRS definition of a qualified dependent (child or relative) who may be covered under an employee's HSA is different. This means, for instance, that an employee whose 24-year-old child is covered on his HSA-qualified high-deductible health plan may not be eligible to use HSA funds to pay that child's medical bills (unless the child is a full-time student, and therefore a qualified dependent for tax purposes).

Affordable Care Act Limits Differ

Starting in 2015, out-of-pocket limits for HDHPs under the Affordable Care Act (ACA) were slightly higher than the IRS’s limits on HSA-qualified HDHPs. But the IRS limits are what determine if an HDHP is HSA-compliant for tax purposes.

The Department of Health and Human Services published its 2016 ACA out-of-pocket limits for HDHPs in the Federal Register at the end of February 2015, in its Notice of Benefit and Payment Parameters for 2016.




ACA out-of-pocket limits for HDHPs

Individual: $6,850

Family: $13,700

Individual: $6,600

Family: $13,200

IRS out-of-pocket limits for HSA-qualified HDHPs

Individual: $6,550

Family: $13,100

Individual: $6,450


“The ACA limits are based on the out-of-pocket limits for high-deductible health plans (although the method of indexing the limits for inflation is different, with the result that the dollar amounts don’t match),” according to an analysis by Covington, an employment law firm. Moreover, the ACA limits “apply to all nongrandfathered group health plans, including (but not limited to) HDHPs.”

A May 7, 2015, FYI alert from Buck Consultants noted that, regarding the ACA-specific limits, “under recent guidance from the Department of Health and Human Services, a plan must apply the annual limitation on cost sharing for self-only coverage to OOP [out-of-pocket] maximums for each individual in a family plan—even if this amount is below the family OOP maximum.”

However, “Employers offering HSA/HDHP plans will need to ensure they satisfy the lower IRS out-of-pocket maximums for HDHPs,” not the higher ACA limits, Buck Consutlants advised. “Plan sponsors should review current and proposed HSA/HDHP arrangements, and update plan documents and enrollment materials as needed to reflect the new limits.”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

Related SHRM Articles—2016 Benefit Rates:

For 2016, Most Retirement Plan Limits Stay Put, SHRM Online Benefits, October 2015

2016 Limits for Commuting, Adoption, FSAs and Other Plans, SHRM Online Benefits, October 2015

2016 Payroll Tax Unchanged; Tax Brackets Nudge Up, SHRM Online Compensation, October 2015

Related SHRM Articles—HSAs and High-Deductible Plans:

Family Plans Must ‘Embed’ Out-of-Pocket Limits in 2016, SHRM Online Benefits, June 2015

CDHP Cost-Savings Maintained over Time, Researchers Find, SHRM Online Benefits, March 2015

Contributions to HSAs Vary by Employer Size, Region, Industry, SHRM Online Benefits, March 2015

Health Care Consumerism: HSAs and HRAs, SHRM Online Benefits, December 2014

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