2024 2025 HSA Contribution Limits and HDHP Qualification

The contribution limits for varied tax-advantaged accounts for the next yr are normally introduced in October, apart from the HSA, which comes out in April or Could. The contribution limits are adjusted for inflation annually, topic to rounding guidelines.

You may solely contribute to an HSA if you happen to’re coated by a Excessive Deductible Well being Plan (HDHP) with no different protection. You should use the cash already within the HSA for certified medical bills no matter what insurance coverage you presently have.

HSA Contribution Limits

Supply: IRS Rev. Proc. 2023-23, Rev. Proc. 2024-25.

Employer contributions are included in these limits.

The household protection numbers occurred to be double the person protection numbers in 2024 however it isn’t at all times the case yearly. As a result of the person protection restrict and the household protection restrict are each rounded to the closest $50, the household protection restrict could be barely extra or barely lower than double the person protection restrict when one quantity rounds up and the opposite quantity rounds down.

Age 55 Catch-Up Contribution

As in 401k and IRA contributions, you’re allowed to contribute further if you’re above a sure age. If you’re age 55 or older by the tip of the yr (not age 50 as in 401k and IRA contributions), you’ll be able to contribute an extra $1,000 to your HSA. If you’re married, and each of you’re age 55, every of you’ll be able to contribute a further $1,000 to your respective HSA.

Nonetheless, as a result of an HSA is in a single particular person’s identify, identical to an IRA — there isn’t any joint HSA even when you’ve got household protection — solely the individual age 55 or older can contribute the extra $1,000 in his or her personal identify. If solely the husband is 55 or older and the spouse contributes the total household contribution restrict to the HSA in her identify, the husband has to open a separate account in his identify for the extra $1,000. If each husband and spouse are age 55 or older, they will need to have two HSA accounts in separate names in the event that they wish to contribute the utmost. There’s no strategy to hit the mixed most with just one account.

The $1,000 extra contribution restrict is mounted by regulation. It’s not adjusted for inflation.

Two Plans Or Mid-12 months Adjustments

The boundaries are extra sophisticated if you’re married and the 2 of you’re on completely different well being plans. It’s additionally extra sophisticated when your medical insurance adjustments mid-year. The insurance coverage change may very well be as a consequence of a job change, marriage or divorce, enrolling in Medicare, the delivery of a kid, and so forth.

For these conditions, please learn HSA Contribution Restrict For Two Plans Or Mid-12 months Adjustments.

HDHP Qualification

The IRS additionally defines what qualifies as an HDHP. For 2024, an HDHP with particular person protection will need to have at the least $1,600 in annual in-network deductible and not more than $8,050 in annual out-of-pocket bills. For household protection, the numbers are a minimal of $3,200 in annual deductible and not more than $16,100 in annual out-of-pocket bills.

For 2025, an HDHP with particular person protection will need to have at the least $1,650 in annual deductible and not more than $8,300 in annual out-of-pocket bills. For household protection, the numbers are a minimal of $3,300 in annual deductible and not more than $16,600 in annual out-of-pocket bills.

Please word the deductible quantity is a minimal whereas the out-of-pocket quantity is a most. The utmost out-of-pocket restrict solely applies to the in-network quantity. If the in-network out-of-pocket restrict of your insurance coverage coverage is simply too excessive, it doesn’t qualify as an HSA-eligible coverage.

As well as, simply having the minimal deductible and the utmost out-of-pocket isn’t ample to make a plan qualify as HSA eligible. The plan should additionally meet different standards. See Not All Excessive Deductible Plans Are HSA Eligible.

Supply: IRS Rev. Proc. 2023-23, Rev. Proc. 2024-25.

Contribute From Payroll

When you have a Excessive Deductible Well being Plan (HDHP) via your employer, your employer could already arrange a linked HSA for you at a specific supplier. Your employer could also be contributing an quantity in your behalf there. You save Social Safety and Medicare taxes if you contribute to the HSA via payroll. Your employer could also be paying the charges for you on that HSA.

If you contribute to an HSA outdoors an employer, you declare the tax deduction in your tax return much like if you contribute to a Conventional IRA. Should you use tax software program, you should definitely reply the questions on HSA contributions. The tax deduction exhibits up on Type 8889 line 13 and Schedule 1 line 13.

Non-Dependent Grownup Youngsters

In case your HDHP additionally covers an grownup youngster who’s not claimed as a dependent in your tax return, every non-dependent grownup youngster coated by the plan can even contribute to a separate HSA of their identify on the household protection degree after they don’t produce other non-HDHP protection. It is because they meet the eligibility:

(a) Coated by an HDHP with no different protection; and
(b) The HDHP coverage they’ve covers multiple individual.

Every non-dependent grownup youngster can open a separate HSA on their very own with an HSA supplier.

Greatest HSA Suppliers

Should you get the HSA-eligible excessive deductible plan via an employer, your employer normally has a chosen HSA supplier for contributing by way of payroll deduction. It’s finest to make use of that one as a result of your contributions by way of payroll deduction are normally exempt from Social Safety and Medicare taxes. In order for you higher funding choices, you’ll be able to switch or roll over the HSA cash out of your employer’s designated supplier to a supplier of your alternative afterward. See How To Rollover an HSA On Your Personal and Keep away from Trustee Switch Charge.

If you’re not going via an employer, or if you happen to’d prefer to contribute by yourself, you too can open an HSA with a supplier of your alternative. For the very best HSA suppliers with low charges and good funding choices, see Greatest HSA Supplier for Investing HSA Cash.