Medical expenses in the United States can be a drain on the finances of individuals. Although almost every US citizen has some form of health insurance, Health Savings Accounts help individuals to pay for healthcare costs not covered by their insurance.

In addition, an HSA is also a tax-deductible form of savings that minimize the taxable income for employees.

But who can opt for HSAs and who can benefit from these savings accounts?

In this blog, we’ll take you through these questions and the HSA contribution limits over the years with a special focus on the limits of 2021.

What is a Health Savings Account (HSA)?

HSA, a tax-advantaged account, helps employees make savings for qualified medical expenses. Generally, it is for individuals covered under high-deductible health plans (HDHPs). The federal government normally sets a deposit limit each year that varies from year to year based on inflation. Both employees and employers can contribute, but only up to the limit prescribed by the government.

Account-holders can use the funds to pay qualified medical expenses such as medical, dental, prescription drugs, and vision care. Since the Coronavirus Aid, Relief, and Economic Security (CARES) Act is now law, the latest add-on to the above list is over-the-counter medications without a prescription.

HSA Eligibility

You are eligible for an HSA if you are enrolled in a high-deductible health insurance plan (HDHP), among other requirements. Generally, employers offering high-deductible health plans tender the HSA account. Otherwise, if you have a high-deductible health plan, you can avail yourself of an HSA account. 

HSA contributions have a marked yearly limit. You are free to decide the amount you wish to deposit, but it must not exceed the per limit set by the government. An employer-provided HSA account lets you contribute to the fund straight from your payroll.

You can use the debit card given along with your account to pay for eligible medical expenses. You can use the card for all eligible expenses, not included in your plan, excluding the insurance premium.

HSA contribution limits are put on hold when the account holders opt for Medicare post the age of 65, i.e. you can no longer contribute to HSA after attaining the age of 65. However, holders can continue to use the HSA funds to pay for out-of-pocket medical expenses.

If you use the funds towards payment on non-eligible expenses, a tax deduction would be applicable.

Qualifying parameters for HSA Account

  • Enrolled into qualified HDHP
  • No health coverage availed
  • Medicare not availed
  • Someone else’s tax return dependents are not qualified as well

HSA Contribution Limits Guidelines

Health savings account holders must adhere to the guideline of annually adjusted contribution limits. Other requisites of the account are: employers’ contributions are non-inclusive in gross income, and no tax obligations are implied on earnings and distributions. The account is valid post the working period threshold, which gives you a medium to pay your medical expenses, absolutely tax-free after the retirement age.

IRS rules for HSA accounts for 2021 have a higher amount compared to the HSA limits in 2020.

On May 20, the internal revenue service announced the HSA limit for the year 2021. In case you’re confused about the difference between HSA and FSA find out more on this blog

Note: HSA contribution deadline for the year has been extended to May 17, 2021, from April 15, 2021.

Latest Health Savings Account Limits

  • HSA contribution limits 2021 are set at $3,600 for a self-only coverage-oriented account.
  • Account-holders who opted for family coverage can contribute $7,200.
  • 2021 HSA contribution limits over 55 are announced as well, and the concerned holders can contribute an additional amount of $1,000 in “catch up” contributions.

Personally, there are further deductions to 2021 HSA contribution limits, i.e. employer contributions, excluded from income. HSA contribution rules include funds provided through a cafeteria plan as well.

2022 Limits – Streamlining the HSA plan for 2022, the limits are $50 more than 2021 contributions for self-only coverage. Furthermore, the 2022 limit is $100 more than the 2021 HSA contribution limits for family coverage.

HSA Limits

Self-Only Coverage

Family Coverage Catch-Up Contributions



$7,300 $1,000
2021 $3,600 $7,200


2020 $3,550 $7,100


HSA Changes in Minimum Deductibles

As already mentioned, account holders must hold a high deductible health plan.

  • The HSA deduction for the 2021 health plan is $1400 for self-only coverage.
  • As for family coverage, the deductibles must be $2,800

The HSA contribution limit for 2021 is similar to the HSA limits for 2020. The 2021 HSA contribution limits in terms of deductibles have been the same for three years in a row.

 HSA Changes in

Minimum Deductibles

Self-Only Coverage Family Coverage


$1,400 $2,800
2021 $1,400


2020 $1,400


Out-of-Pocket Expenses HSA Account Rules

Deductibles, copayments, and other amounts account for out-of-pocket expenses and do not include premiums. There are also applicable HSA contribution limits 2021 on out-of-pocket expenses payment. In contrast, the IRS states that the applicability of the limit is subject to deductibles and expenses for services.

  • Out-of-pocket 2021 HSA contribution limits are $7000 and $14000 for self and family coverage, respectively.
  • Out-of-pocket HSA limits 2020 are lower at $6.900 for self-only coverage and $13,800 for family coverage.

Out of Pocket Expenses

HSA Account Rules

Self-Only Coverage Family Coverage


$7,050 $14,100
2021 $7,000


2020 $6,900


ACA Out-of-pocket Limit vs HSA Out-of-pocket Limit

Participants often mix up the out-of-pocket limit applicable to ACA with the HSA stated limit. Set by federal agencies, this is a slight difference in the limits of both these health plans. 

HHS or the Department of Health and Human Service sets the out-of-pocket limit for ACA. Contrarily, the IRS suggests the HSA changes and limits. The limits for ACA are generally above the limits of HSA.

Limits 2021 2020

Out of Pocket Limits for ACA Compliant Plans (HHS)


$8,550 $8,150




Out of Pocket Limits for HSA-qualified HDHPs (IRS)

Self-Only $7,000


Family $14,000


Why are Annual HSA Adjustments Made?

Inflation rates are major determinants of adjustments made to health savings account rules of limit every year. The tax advantageous accounts announcements are made around October. But for HSA accounts announcements are made in April or May. 

Since the adjustments are aligned to inflation, they are around $50 per year. The Consumer Price index is used to determine the inflation-oriented limit of high deductible health plan HSA, for every financial year ending. The balance is fixed by statute and may not always be in sync. 

New HSA contribution limits 2021 do provide a great deal of relief for the holder since the value of the account would increase as well. This is a matter of concern since the exceeding costs of healthcare go above the threshold of inflation.

The increase in HSA contribution limits 2021 would not only help Americans meet their healthcare obligations but would also contribute to retirement health needs.

Flexibility is provided while making maximum HSA contributions 2021. Employee welfare is the motive for employers. Employers can choose to pay the amount upfront, semi-annually, quarterly, monthly, among other regular interval timelines.

Comparison of HSA contribution limits 2021 with HSA limits 2020  

Keeping a check of the limits from two years, we can notice the limit for individuals went up by $50, while it went up by $100 for families. Given that inflation is accounted for in maximum contributions, the HSA contribution limits for 2021 seem fair. 

In the table below, we have the 2021 HSA contribution limits insights alongside HSA limits 2020.


2021 2020

HSA Contribution Limit (employer + employee)

Self-Only $3,600


Family $7,200


HSA Catch Up Contributions (age 55+)




Family $1,000


As far as the minimum deductibles are concerned, there have been no changes in the rates in both years.

There was a hike of $100 in maximum out-of-pocket HSA contribution limits 2021 for individuals. As for the maximum out-of-pocket 2021 HSA contribution limits for families, the hike was $200.

Frequently Asked Questions on HSA Contribution Limits 

Are HSA contributions tax-deductible?

HSA contribution limits 2021 are free of tax since it is a tax-advantaged savings account. Their motive is to provide an efficient medium of savings funds to meet present or future health care needs. The money in the account accumulates every year, if not spent.

Do employer contributions affect the HSA limit?

Both employers and employees can contribute to the account, but the amount must not exceed the HSA contribution limits of 2021 collectively.

What is the HSA contribution?

An HSA contribution is paid by the employer or employee towards the eventual payment of eligible medical expenses. HSA contributions must abide by the HSA contribution limits for that year. 

How much to contribute to HSA?

Inflation is the main adjustor for the HSA contribution limit each year. HSA contribution limits for 2021 are $3,600 for individual accounts and $7,200 for family coverage.

How much can you contribute to HSA?

You must contribute in line with the HSA contribution limits 2021 which also includes the employer’s contribution. The overall sum of the contribution made must not exceed the limit set by the government.