The Internal Revenue Service ("IRS"), has just released their annual limits for 2019. 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 got crazy this year and decided to up the single HSA maximum again by $50.00 to $3,500, and the family maximum increased by $100 to $7,000. The minimum deductible amount will remain at $1,350 to make it easier for a plan to qualify as a qualified high deductible health plan (QHDHP) in CY 2019. Given health care costs on the rise, a $1,350 is no longer considered a "high deductible" in the industry.
Here is a snapshot of 2018 vs. 2019 changes, relevant to QHDHPs and HSAs for plan sponsors:
2019 HSA Maximum
Single: $3,500 (2018 it was $3,450)
Family: $7,000 (2018 it was $6,900)
2019 HSA Minimum Deductible
Single: $1,350 (2018 it was $1,350)
Family: $2,700 (2018 it was $2,700)
2019 Out of Pocket
Single: $6,750 (2018 they were $6,650)
Family: $13,500 (2018 they were $13,500)
HSA catch-up contributions for those age 55 and older are still $1,000 (no change). Keep in mind this is a different age requirement on catch-up contributions permitted under 401(k) plans (age 50 permissible).
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 2019 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 $2,772 year that goes straight to Uncle Sam. He will gladly take it.
At least 81% of employers offer such a plan as an option in 2019 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 benefits advisory firm on your side to help you design, administer, negotiate, communicate and deploy these types of plans.
It was over a decade ago that me and a progressive Fortune 500 client out of Austin, launched the very first CDHP with HSA in the state of Texas ... those whose accounts have built up over the years have shared their gratitude.