2023 2024 2025 HSA Contribution Limits and HDHP Qualification

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

HSA Contribution Limits

Supply: IRS Rev. Proc. 2022-24, Rev. Proc. 2023-23, creator’s calculation.

Employer contributions are included in these limits.

The household protection numbers occurred to be double the person protection numbers in 2024 but it surely 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 might be 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 may contribute an further $1,000 to your HSA. If you’re married, and each of you might be age 55, every of you may 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 may have household protection — solely the particular person 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 need to contribute the utmost. There’s no option to hit the mixed most with just one account.

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

Two Plans Or Mid-12 months Modifications

The boundaries are extra sophisticated if you might be married and the 2 of you might be 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 result of a job change, marriage or divorce, enrolling in Medicare, the beginning of a kid, and so forth.

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

HDHP Qualification

You may solely contribute to an HSA if in case you have a Excessive Deductible Well being Plan (HDHP). You need to use the cash already within the HSA for certified medical bills no matter what insurance coverage you at the moment have.

The IRS additionally defines what qualifies as an HDHP. For 2023, an HDHP with particular person protection will need to have at the very least $1,500 in annual deductible and not more than $7,500 in annual out-of-pocket bills. For household protection, the numbers are a minimal of $3,000 in annual deductible and not more than $15,000 in annual out-of-pocket bills.

For 2024, an HDHP with particular person protection will need to have at the very least $1,600 in annual 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 very 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 be aware the deductible quantity is a minimal whereas the out-of-pocket quantity is a most. If the out-of-pocket restrict of your insurance coverage coverage is just 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. 2022-24, Rev. Proc. 2023-23, creator’s calculation.

Contribute Outdoors Payroll

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

Whenever you contribute to an HSA exterior an employer, you get the tax deduction in your tax return, much like whenever 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 Kind 8889 line 13 and Schedule 1 line 13.

In case your HDHP additionally covers your grownup baby who’s not claimed as a dependent in your tax return, they will additionally contribute to an HSA in their very own identify in the event that they don’t produce other non-HDHP protection. They get a separate household protection restrict. They must open an HSA on their very own with an HSA supplier.

Finest HSA Suppliers

Should you get the HSA-eligible excessive deductible plan via an employer, your employer often has a chosen HSA supplier for contributing through payroll deduction. It’s finest to make use of that one as a result of your contributions through payroll deduction are often exempt from Social Safety and Medicare taxes. In order for you higher funding choices, you may 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 when you’d prefer to contribute by yourself, you can even open an HSA with a supplier of your alternative. For the most effective HSA suppliers with low charges and good funding choices, see Finest HSA Supplier for Investing HSA Cash.