Aug 24, 2018
The House of Representatives passed a bill that would raise the annual limit on HSA contributions to match out-of-pocket deductibles for HDHPs. HR 6311 would nearly double annual contribution limits for those with employee-only health coverage —from $3,450 to $6,550. Contribution limits would go from $6,900 to $13,300 for family coverage. Those over 55 would be able to contribute an additional $1,000 regardless of their level of health coverage. The question is whether the contribution limits will encourage people to contribute more to their HSAs.
Only 13 percent of account owners contributed the maximum in 2016, according to the Employee Benefit Research Institute (EBRI). However, the longer someone has an HSA, the more likely they are to contribute the maximum. Only 6 percent of HSAs opened in 2016 received the maximum annual contribution compared to 30 percent of those opened a decade earlier. Paul Fronstin, EBRI director of health research, said that workers need more education to get the full value of their HSAs. EBRI notes that HSAs offer a triple-tax advantage:
- The Employee’s HSA contributions are tax deductible
- Any interest or other capital earnings on assets build up tax-free
- Withdrawals for qualified medical expenses aren’t taxed
Contact your LISI Sales Representative to find out more about HSAs.
