IRS Sets 2016 Health Savings Account Contribution Limits

The U.S. Internal Revenue Service isn’t known for doling out good news, yet the agency recently broke character when it announced that it will raise the maximum allowable contribution to a health savings account by $100 in 2016.

This means that more of an employee’s hard-earned dollars can go untaxed by the government if put toward a high-deductible health care plan. There’s a catch, though. The increased limit only applies to families. Limits for individuals will remain unchanged.

The IRS said on May 4 that the maximum contribution that can be made next year to an HSA linked to a high-deductible plan will be $6,750 for employees with family coverage, up from $6,650. The maximum contribution for those with single coverage will remain at $3,350.

Unfortunately, in a balancing act, maximum out-of-pocket expenses will increase in 2016 for both groups. Individuals will pay an additional $100 for single coverage while families will pay an additional $200 before their high-deductible health plan coverage kicks in.

The increases in HSA limits have been attributed to recent changes in the cost of living.