HealthEquity blog

2020 HSA contribution limits

2020The IRS just announced that health savings account (HSA) contribution limits will increase in 2020, giving you and your employees the chance to save more than ever.

As a response to rising inflation, the contribution limits into savings vehicles like IRAs, 401(k)s, and HSAs can rise from year to year. 

A quick HSA refresher

An HSA is a tax-advantaged account paired with an HSA-qualified health insurance policy. HSAs allow your employees to save tax-free money for qualified medical expenses. When used for qualified medical expenses, there is no tax on your HSA funds, and the funds in the account are exempt from capital gains and other investment2 related taxes. These savings create a triple-tax advantage for participants. Increased limits can help your employees accelerate the process of saving and investing.

To qualify for an HSA and the triple-tax savings, your employees need an HSA-qualified policy, which is a plan with a higher deductible. In order to qualify for 2020, the employee must have a health insurance policy with a deductible of at least $1,400 per year for individual coverage, and $2,800 per year for a family plan.

2020 HSA contribution limits

Because there are two main distinctions of HSAs, individual and family, there are two different sets of contribution limits:

For the 2020 calendar year, the contribution limit for individual HSAs will increase to $3,550 per year, up from $3,500 in 2019.

For the 2020 calendar year, the contribution limit for family HSAs will increase to $7,100 per year, up from $7,000 in 2019.

If the HSA owner is 55 years of age or older, they can make an additional $1,000 catch-up contribution into their HSA.

Employees can make HSA contributions at any time during the year, but if they want to maximize their 2020 contributions, breaking it down into monthly contributions through pre-tax payroll deductions can make it much easier.  


Next year's HSA contribution limits are a great reason for your employees who don't currently have an HSA-qualified health plan to prepare for open enrollment later this year. Some of the greatest advantages of HSAs include being able to use funds to pay for qualified medical expenses, and rolling over any unused balance to next year or even all the way to retirement and beyond. 


1HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.

 2Investments available to HSA holders are subject to risk, including the possible loss of the principal invested and may not be eligible for federal depository insurance by the FDIC or NCUA or guaranteed by HealthEquity, Inc. HealthEquity, Inc. does not provide financial advice.


Topics: HSA, HSA contribution limit, HSA contributions

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