On May 16, 2023 the Internal Revenue Service announced the HSA contribution limits for 2024. These are set each year and adjusted for inflation, and 2023 limits are significantly higher than those set for 2023.
For 2024 HSA-eligible account holders are allowed to contribute:
- $4,150 for individual coverage
- $8,300 for family coverage
This is a $300 increase for individuals and a $550 increase for families from the 2023 HSA contribution limits.
The 2023 HSA contribution limits are:
- $3,850 for individual coverage
- $7,750 for family coverage
If you are 55 years or older, you’re still eligible to contribute an extra $1,000 catch-up contribution.
To be eligible for an HSA, your health plan has to meet the following IRS criteria for a high-deductible health plan (HDHP):
- Must have a minimum deductible of $1,600 for individual coverage, and $3,200 for family coverage
- Out-of-pocket maximums cannot exceed $8,050 for individual coverage and $16,100 for family coverage
- Must have a minimum deductible of $1,500 for individual coverage, and $3,000 for family coverage
- Out-of-pocket maximums cannot exceed $7,500 for individual coverage and $15,000 for family coverage
Annual minimum deductibles have increased $100 for individuals and $200 for families from 2023, and out-of-pocket limits have increased by $550 for individuals and $1,100 for families.
You can use our HSA contribution calculator to help figure out your optmial monthly contribution.
How HSAs work
HSAs allow for tax-deductible contributions, tax-free interest and tax-free withdrawals for qualified medical expenses. This means the money you contribute to an HSA can be used tax-free on health expenses such as prescriptions, copays, and more. This can help you minimize your health care costs throughout the year while saving for the future.
If you choose a high-deductible health insurance plan through an employer, you are likely eligible to contribute to an HSA. If this is the case, your employer can also help to contribute to your HSA before taxes, so you can receive extra savings until you reach the annual contribution limit.
The main benefit of an HSA? It’s 100% yours. If you leave your job, you can take your HSA (and the funds that you contributed to it) with you. This is different from a Flexible Spending Account (FSA) in which the funds will get returned back to your employer.
There are three different tax advantages you can get from your HSA:
- Tax-free contributions
- Tax-free spending for all qualified medical expenses
- Tax-free growth
The result is the most tax-advantaged account on the market.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.