In 2025, savers with family coverage will be able to deposit up to $8,550 into their Health Savings Accounts (HSAs), an increase of $200 from the 2024 limit of $8,300. The IRS will release the catch-up contribution for savers age 55 and older later this year, which currently stands at $1,000 for 2024, unchanged from 2023.
To make HSA contributions, you must have an eligible high-deductible health insurance plan. The IRS defines a “high-deductible” plan as at least $1,650 for self-only plans or $3,300 for family coverage in 2025. HSAs offer three tax benefits: an upfront deduction for contributions, tax-free growth on investments, and no taxes on withdrawals used for qualified medical expenses.
However, a survey from the Plan Sponsor Council of America found that only 19% of HSA participants invest their balance in 2023. This highlights the importance of making informed decisions when it comes to managing HSA funds. By investing their balance, savers can potentially grow their savings and take advantage of the tax benefits offered by HSAs. It is crucial to research and understand different investment options before making any decisions to ensure that your HSA funds are working for you in the long term.