Annual Deduction Limits and Minimum Deductibles Announced for 2021

In Rev. Proc. 2020-32, the IRS announced the 2021 calendar year annual deduction limits, minimum deductibles, and maximum out-of-pocket limits for high-deductible plans.

Annual deduction limits:

  • $3,600 for an individual with self-only coverage
  • $7,200 for an individual with family coverage

Minimum deductibles:

  • Not less than $1,400 for self-only coverage or $2,800 for family coverage

Maximum out-of-pocket limits:

  • Annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage

Other Limits, Fees, and Requirements from HHS

On May 14, 2020, the Department of Health and Human Services (HHS) published the Notice of Benefit and Payment Parameters for 2021, Final Rule, which included the following:

2021 Maximum Annual Limitation on Cost Sharing

  • $8,550 for self-only coverage
  • $17,100 for other than self-only coverage

This is an approximately 4.9% increase above the 2020 parameters of $8,150 for self-only coverage and $16,300 for other than self-only coverage.

FFE User Fees
The Federal-facilitated Exchange (FFE) user fee rate is 3.0% of premium.

Excepted Benefit Health Reimbursement Arrangements (HRAs)
Non-Federal governmental plan sponsors that offer excepted benefit HRAs are required to provide a notice that is generally consistent with the content of a summary plan description required under the Employee Retirement Income Security Act of 1975 (ERISA).

The notice must:

  • State conditions of eligibility to receive benefits under the HRA
  • Describe annual or lifetime caps or other limits on benefits under the HRA
  • Provide a summary of the benefits generally consistent with ERISA requirements