IRS Adjusts Deduction Limits for Health Savings Accounts

The Internal Revenue Service has issued inflation-adjusted deduction limits for health savings accounts next year.

Revenue Procedure 2016-28 provides the 2017 inflation adjusted deduction limitations for annual contributions made to an HSA under Section 223 of the Tax Code. The deduction limitations are updated annually to reflect the cost-of-living adjustments. 

For calendar year 2017, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan is $3,400. The annual limitation on deductions for an individual with family coverage under a high-deductible health plan is $6,750.

For 2017, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage.