Rev Proc 2016-28, 2016-20 IRB
A new revenue procedure provides the annual inflation-adjusted contribution, deductible, and out-of-pocket expense limits for 2017 for health savings accounts (HSAs).
HSA basics. Eligible individuals may, subject to statutory limits, make deductible contributions to an HSA. Employers as well as other persons (e.g., family members) also may contribute on behalf of an eligible individual. Employer contributions generally are treated as employer-provided coverage for medical expenses under an accident or health plan and are excludable from income. In general, a person is an “eligible individual” if he is covered under a high deductible health plan (HDHP) and is not covered under any other health plan that is not a high deductible plan, unless the other coverage is permitted insurance (e.g., for worker’s compensation, a specified disease or illness, or providing a fixed payment for hospitalization). General purpose health accounts (flexible spending accounts (FSAs)) and health reimbursement arrangements (HRAs) constitute “other coverage” that will generally preclude HSA eligibility. However, exceptions apply for, among other things, limited purpose FSAs and HRAs (those providing only certain benefits, e.g., dental and vision) and FSAs and HRAs imposing high annual deductibles.
HSA distributions not used to pay for qualifying medical expenses generally are included in income and subject to a 10% penalty tax.
Annual contribution limitation for 2017. For calendar year 2017, the limitation on deductions under Code Sec. 223(b)(2)(A) for an individual with self-only coverage under an HDHP is $3,400 (up from $3,350 for 2016). For calendar year 2017, the limitation on deductions under Code Sec. 223(b)(2)(B) for an individual with family coverage under an HDHP is $6,750 (no change from 2016).
HDHP for 2017. For calendar year 2017, a, HDHP is defined under Code Sec. 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 (no change from 2016) for self-only coverage or $2,600 (no change from 2016) for family coverage, and with respect to which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 (no change from 2016) for self-only coverage or $13,100 (no change from 2016) for family coverage.