The IRS has released the contribution limits for health savings accounts (HSAs) for 2025. These accounts are triple-tax advantaged for medical expenses, meaning contributions are tax-deductible, investments grow tax-free, and withdrawals are tax-free when used for qualified medical expenses. The new HSA contribution limit for 2025 is $4,300 for those with self-only health coverage, up from $4,150 in 2024. For individuals with family coverage, the contribution limit will be $8,550 in 2025, up from $8,300 in 2024. The catch-up contribution for those age 55 and older will be announced later this year, with the current limit standing at $1,000 for 2024.
To make contributions to an HSA, individuals must have an eligible high-deductible health insurance plan. The IRS defines a high deductible as at least $1,650 for self-only plans or $3,300 for family coverage in 2025. By contributing to an HSA, individuals can take advantage of tax benefits and save for future medical expenses. However, a survey from the Plan Sponsor Council of America found that only 19% of HSA participants invest their balance, meaning the majority are missing out on potential growth by leaving savings in cash.
For many individuals, an HSA can be a valuable tool for managing healthcare costs and saving for the future. Contributions to an HSA are tax-deductible, investments within the account grow tax-free, and withdrawals for qualified medical expenses are tax-free. The IRS has announced the contribution limits for 2025, with the limit increasing to $4,300 for self-only coverage and $8,550 for family coverage. Savers age 55 and older can also make catch-up contributions, with the current limit set at $1,000 for 2024.
Having an eligible high-deductible health insurance plan is a requirement for making contributions to an HSA. Individuals with self-only plans must have a minimum deductible of $1,650, while those with family coverage must have a deductible of at least $3,300. By contributing to an HSA, individuals can take advantage of the tax benefits offered by these accounts and save for future medical expenses. However, many HSA participants do not invest their balances, missing out on potential growth by keeping savings in cash.
It is important for individuals to understand the benefits of an HSA and to take advantage of the opportunities they provide for tax-advantaged saving. With the contribution limits for 2025 now announced, individuals can plan their savings and take advantage of the tax benefits offered by these accounts. By contributing to an HSA and investing their balances, savers can maximize the growth potential of their savings and ensure they have funds available for future medical expenses. Planning for healthcare costs is an important part of overall financial planning, and an HSA can be a valuable tool in helping individuals meet their healthcare needs while saving for the future.
