- $3,550 for individual coverage under an attached HDHP (up $50 from 2019).
- $7,100 for family coverage (up $100 from 2019).
- For individual HDHPs, the deductible amount must be between $1,400 and $6,900. That’s compared with $1,350 and $6,750 in 2019.
- For families, the range is $2,800 to $13,800. That’s up from $2,700 and $13,600 in 2019.
Long-term benefitsOne of the best benefits from an HSA is the long-term advantage of being able to carry over balances year after year and let it build up for medical expenses in retirement. But, one of the key points that your employees should know is that if they use the funds in their HSAs for purposes other than qualified medical expenses, they have to pay a 20% penalty. The website Investopedia recommends that your employees:
- Max out their HSA contribution each year. If they do so, the amount they can save over the long term only grows through compounding.
- Hold off on spending contributions now, and try to not use HSA funds for current medical expenses.
- Make sure they only use the money for qualified medical expenses, so they don’t have to pay penalties of 20% plus regular income tax on their withdrawals.
- Invest contributions for the long run. For example, if you’re currently invested in a mix of 80% stocks and 20% bonds, you should probably invest your HSA that way, too.
- Use the account once they’re 65 or older. An added benefit to waiting until you’re at least 65 to spend your HSA balance is that the 20% penalty for withdrawing funds for purposes other than qualified medical expenses doesn’t apply. But, you will have to pay income tax if you don’t use the funds for qualified medical expenses.