The Internal Revenue Service (“IRS”), has just released their annual limits for 2016. Yes, this is the kind of thing that gets me all excited. It must be hard for the IRS, whose sole purpose is to collect taxes, to furnish us the new limits allowing for greater tax savings for astute health plan participants who like to save money. This does not mean we do not believe in paying our fair share … it only means we do not like to pay more than our fair share.
The IRS decided not to change the single HSA maximum so it will remain at $3,350 and the Family maximum increased modestly by $100. They did, however, lower the minimum deductible amount by $50 to $1,300 from $1,350 to make it easier for a plan to qualify as a qualified high deductible health plan (QHDHP) in CY 2016.
2016 HSA Maximum
- Single: $3,350 (2015 it was $3,350)
- Family: $6,750 (2014 it was $6,650)
2016 HSA Minimum Deductible
- Single: $1,300 (2015 it was $1,350)
- Family: $2,600 (2015 it was $2,600)
2016 Out of Pocket
- Single: $6,550 (2015 they were $6,450)
- Family: $13,100 (2015 they were $12,900)
HSA catch-up contributions for those age 55 and older are still $1,000 (no change)
The IRS has been getting better about releasing these dollar limits to prepare for next year’s open enrollment earlier each year to prepare for next year’s 2016 benefits. If you are an employer and do not offer a qualified health plan, then employees with family coverage (in the 39.6% marginal tax bracket) are being forced to pay an additional $2,673 year that goes straight to the guy pictured at the top of this post. He will gladly take it.
81% of employers offer such a plan as an option in 2015 and one-third provide a consumer-driven health plan as the only option, according to the National Business Group on Health. Thinking through the right tax and design strategy for all your health plan participants is why you want a good advisory firm on your side to help you design, administer, negotiate, communicate and deploy. Over a decade ago, a team I led deployed the very first CDHP program for a large Fortune 500 employer in the state of Texas. I gush with pride seeing how these plans have matured.