The Internal Revenue Service announced new, higher contribution limits for health savings accounts for 2020. HSAs are the best way to save courtesy of Uncle Sam, with triple tax benefits. You put money in on a tax free basis (usually through salary deferrals), it builds up tax free (you can invest it), and it comes out tax free to cover out-of-pocket healthcare expenses.
For 2020, you can contribute $3,550 for individual coverage, up from $3,500 for 2019, or $7,100 for family coverage, up from $7,000 for 2019. If you’re 55-plus, you can sock away an additional $1,000 a year. That catch-up amount isn’t subject to inflation adjustments.
You can contribute to an HSA if you’re in a qualifying high-deductible health plan. For 2020, that means a plan with a minimum annual deductible of $1,400 for individual coverage or $2,800 for family coverage.
At a minimum, you should contribute enough to cover your deductible. Got an unexpected doctor’s bill? You can put money into your HSA, take it right out, and the government just paid 25% of the bill. (The higher your tax bracket, the bigger your savings.)