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The Maximum HSA Contributions for 2015 & 2016
July 27, 2015 | 2 Comments

The IRS recently published an inflation adjustment increase to the maximum HSA contribution for 2016 over the 2015 maximum HSA contribution limit. More specifically, the family contribution maximum will increase while the individual contribution maximum will stay the same as this year’s. And there are some associated HDHP limit changes as well.

If you’ve been following along, you know that I have been a big fan of health savings accounts (HSA’s) over the last few years and fully max them out. Why? HSA’s are like IRA’s on steroids (tax-free steroids at that). They offer users pre-tax contributions, tax-free investment gains, and tax-free distributions to pay for eligible health care expenses.

With HSA’s, you own the account. It goes with you and can be used regardless of future employment status or health plan. This is not the case with FSA’s, which are tied to your employer.

All benefits aside, your ability to annually contribute to an HSA is determined by whether or not you are enrolled in a high deductible health plan (HDHP), as they are defined by the IRS.

For 2016, HDHP’s will be defined as plans that have:

  • A minimum annual deductible of at least $1,300 for individual coverage or $2,600 for family coverage; and
  • Annual out-of-pocket expense maximums (e.g., deductibles, co-payments, and other amounts, but not premiums) up to $6,550 for individual coverage or $13,100 for family coverage.

This compares to 2015 HDHP limit definitions:

  • A minimum annual deductible of at least $1,300 for individual coverage (up from $1,250 in 2014) or $2,600 for family coverage (up from $2,500 in 2014); and
  • Annual out-of-pocket expense maximums (e.g., deductibles, co-payments, and other amounts, but not premiums) up to $6,450 for individual coverage (up from $6,350 in 2014) or $12,900 for family coverage (up from $12,700 in 2014).

Take this in to consideration when open enrollment comes around this fall.

Here are the maximum HSA contribution amounts for 2015 and 2016…

maximum HSA contribution

2015 Maximum HSA Contribution Limits

  • Individual Plan: $3,350 (+$50 over 2014)
  • Family Plan: $6,650 (+$100 over 2014)

2016 Maximum HSA Contribution Limits

  • Individual Plan: $3,350 (same as 2015)
  • Family Plan: $6,750 (+$100 over 2015)

HSA Catch-Up Contribution Amount

Similar to IRA’s and 401K’s, there are catch up contributions for those age 55 and over. The HSA catch-up contribution is $1,000 for both individual and family plans for both 2015 and 2016.

The Case for Maxing Out your HSA Contribution

In most cases, you’ll have to decide your HSA contributions for the following year during your open enrollment. Your employer will usually let you contribute a specified amount evenly across all pay periods.

Some employers will allow you to make larger contributions towards the end of the year, but you’ll have to check with your HR department.

Here’s why you should consider contributing as much as you can to an HSA. If you are young and healthy, health care costs will eventually catch up with you.

HSA’s allow you to build a significant cushion to protect yourself from future costs. Why pay for health care costs with after-tax dollars if you could pay with pre-tax dollars?

When you turn 65, you can use HSA funds on not just medical expenses, but anything, without penalty (non-medical expenses are taxed like Traditional IRA distributions) – so there’s little downside to contributing too much.

And remember, the entire time, you can grow your contributions through investments, just like any other retirement account.

Your employer may also make tax-free contributions to your HSA, if you are enrolled in their HDHP offering.

If all of that sounds appealing and you’re interested in more on HSA’s, check out the previous links in this article or IRS publication 969. Also, check out my list of the best HSA accounts if you’ve left an employer and want to move your current HSA to a new one (fees do vary quite a bit).

HSA Discussion:

  • Will you be maxing out your HSA this year or next year?
  • Have you moved away from HDHP/HSA’s now that ACA changes have taken effect?
What if you Over-Contribute to a 401K? (and a Case for Purposefully Doing so when you Change Jobs)
July 13, 2015 | 7 Comments
What if you Over-Contribute to a 401K? (and a Case for Purposefully Doing so when you Change Jobs)

All good things come with limitations. And never is that more true than with retirement accounts.
For those lucky enough to have an employer-sponsored 401K (it is rarer that you think), you are probably aware that …

All Successful Financial Goals Should Start with This
July 6, 2015 | 12 Comments
All Successful Financial Goals Should Start with This

There are an endless variety of financial goals that you can set out to achieve.
Some can be very short term, i.e. “I’m not going to spend a dollar today.”
Some can take a little more planning …

The ACA (Obamacare) Survives. But is it Actually Working?
June 30, 2015 | 17 Comments
The ACA (Obamacare) Survives. But is it Actually Working?

With last Thursday’s ACA Supreme Court ruling confirming that Congress intended to include subsidies for those on the federal exchange in addition to state exchanges, the ACA has now survived an election, two Supreme Court …

457B: The Mysterious Retirement Plan that could Turbo-charge your Retirement Savings
June 22, 2015 | 10 Comments
457B: The Mysterious Retirement Plan that could Turbo-charge your Retirement Savings

In the wake of my wife getting a better job, I thought it would be wise to read through all of her new employer’s benefit plan details. Standard fare, when all of a sudden, something …

The Traditional Retirement Flaw: WHEN Might Not be your Choice
June 15, 2015 | 18 Comments
The Traditional Retirement Flaw: WHEN Might Not be your Choice

It wasn’t long ago that I blasted the traditional 10% savings plan advice given by financial gurus that recommends you work until traditional retirement age (65+), save 10% along the way, and then sip pina …

How I Successfully Appealed an IRS Penalty
June 10, 2015 | 4 Comments
How I Successfully Appealed an IRS Penalty

By all accounts, I’ve been a diligent taxpayer for the last decade plus – never a late fee, never a need for extension, never a penalty, never an audit (or reason to be audited).
So I …


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