2016 HSA Contribution and Rule Changes

MN Health Staff Writer | March 18, 2016

The Internal Revenue Service (IRS) announced changes for 2016 contribution and rule changes 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:


Deductible Limits for High-Deductible Health Plans


Minimum Deductible 2015 2016
Individual policies $1,300.00 $1,300.00
Family policies $2,600.00 $2,600.00


Maximum Out-of-Pockets 2015 2016
Individual policies $6,450.00 $6,550.00
Family policies $12,900.00 $13,100.00


Contribution Limits for HSA Accounts


Maximum HSA Contributions 2015 2016
Individual policies $3,350.00 $3,350.00
Family policies $6,650.00 $6,750.00
Age 55+ Catch-up Contribution $1000.00 $1000.00


Penalties for Nonqualified Medical Expenses


Those under age 65 (unless totally and permanently disabled) who use HSA funds for nonqualified (ineligible) medical expenses will now be charged a penalty of 20 percent and subject to ordinary tax on the funds used for such ineligible expenses.


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).


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Category: MN Individual & Family