Health Saving Accounts and ObamaCare for 2020

We cover everything you need to know about Health Savings Accounts (HSAs) for 2020, including how HSAs work with health plans under the Affordable Care Act.

TIP: The Affordable Care Act is sometimes called “ObamaCare” or the “ACA” for short. Thus, this page is about HSAs and how they work with ObamaCare / ACA plans. Learn more about the Affordable Care Act.

HSA Limits 2020 Summary

Below are the limits for contributions, deductibles, and out-of-pocket maximums for HSAs.

HSA Contribution Limit for 2020

  • Self-only: $3,550
  • Family: $7,100

NOTE: 55 plus can contribute an extra $1,000.

Minimum Deductible for HSA Eligibility

  • Self-only: $1,400
  • Family: $2,800

Maximum Out-of-Pocket Limit for HSA Eligibility

  • Self-only: $6,900
  • Family: $13,800

TIP: The maximums are slightly lower on HSA compatible plans then they are in general on health plans. This has to do with the fact that the rates are raised by different mechanisms. The difference allows for non-HSA compatible high deductible plans. Thus, if you want an HSA, make sure your plan is “HSA Eligible.”

TIP: See Revenue Procedure 2019-25 for final HSA levels.

What Are Health Savings Accounts?

Health savings accounts are tax-advantaged medical savings accounts that you can draw money from for certain medical expenses. They work a bit like a 401k, but money is tax-free in and tax-free out. They are very useful in this respect as they can drop your MAGI (household income after deductions), help you pay fewer taxes, and help you qualify for more assistance.

However, they have some caveats too. Specifically, you can’t pay your premiums with an HSA, and like with a 401k or IRA, you can lose money if you take risky bets so be cautious if you are going to invest your HSA funds.

One last note, to fund an HSA you need to have a High Deductible Health Plan (HDHP) that counts as Minimum Essential Coverage (MEC). So any marketplace plan with a high deductible after cost sharing assistance or any private major medical plan. Employer plans typically need to be paired with employer offered accounts. Medicare, Medicaid, CHIP, aren’t HSA eligible.

2020 HSA Minimums, Maximums, Contribution Limits, and More

Above we gave a quick overview of the limits for 2020, here is all the information again in more detail.

For 2020 a Health Savings Account can be paired with any plan with an annual deductible of more than $1,400 for self-only coverage or $2,800 for family coverage, AKA any High Deductible Health Plan (HDHP).[1]

The 2020 HSA chart below shows several figures pertaining to HSAs and health plans.

  1. The minimum deductible, which is the minimum deductible your High Deductible Health Plan must have after cost assistance.
  2. The maximum out-of-pocket cost.
  3. The contribution limit, which is the total you can contribute in 2018 if you are under 55. Those 55 or older can contribute an extra $1,000, and this is shown in the fourth column.

TIP: You have until you file taxes for 2020 to fund your HSA for 2020 health plans (meaning you can fund it all the way up into 2021).

TIP: Some health plans have out-of-pocket maximums that are too high to qualify for HSAs. Not every ACA-compliant plan is HSA-eligible, so make sure you choose an HSA-eligible plan (the plan will be branded as such). For example, some higher end plans have deductibles too low to qualify and some catastrophic plans have deductibles too high to qualify (as the out-of-pocket maximum for HSAs is slightly lower than the maximum in general).

HSA Chart for 2020

2020 Minimum Deductible Maximum Out-of-Pocket Contribution Limit 55+ Contribution
Single $1,400 $6,900 $3,550 +$1,000
Family $2,800 $13,800 $7,100 +$1,000
TIP: All the figures have increased from last year. See the HSA chart chart from 2019 here.
FACT: HSA’s aren’t “use it or lose it.” The money that you put in an HSA goes in tax-free. You can keep it, invest it, use it tax-free on medical expenses, withdraw funds from it at a fee, and roll it over into a retirement account when you are ready for Medicare. Only FSA’s, the kind of health savings account you get through your employer, are “use it or lose it.”
NOTE: The IRS sets HSA limits each year, and the limits are then published in the Federal Register. With that noted, I suggest shrm.org for a well constructed presentation of each year’s HSA rules. For more details see our full page on Health Savings Accounts.
Citations

  1. Revenue Procedure 2019-25. IRS.gov.