Health savings accounts (HSAs) offer a tax-advantaged way to save money to pay for certain medical expenses. Your HSA contributions are tax-deductible, so they help reduce your taxable income.
But contributions to your health savings account are limited each year by the IRS, so the amount you can contribute depends on whether you have single or family coverage and are over age 55.
With that in mind, the IRS released the HSA maximum contribution amounts for 2024, which are higher than ever. How much will you be able to contribute to your health savings account this year?
Let's start by taking a look at what an HSA is.
What is an HSA?
An HSA is a financial tool that combines tax advantages with savings to pay for certain healthcare expenses. The account allows individuals with high deductible health plans to set aside pre-tax dollars for qualified medical expenses.
This is often seen as a triple tax advantage, combining tax-deductible contributions, tax-free growth, and tax-free withdrawals for eligible healthcare costs.
HSA contribution limits for 2024
For 2024, individuals under a high deductible health plan (HDHP) have an HSA annual contribution limit of $4,150. The HSA contribution limit for family coverage is $8,300. Those amounts are about a 7% increase over what you could contribute last year.
If you are 55 or older, the catch-up contribution has been $1,000. That still applies for 2024. You can see the difference between the 2023 and 2024 HSA maximum contribution amounts in the chart below.
Contribution Limits for Health Savings Accounts
(*Individual means self-only coverage.)
The 2024 HSA contribution limits represent an increase from the previous year's amounts of $550 for family coverage and a jump of $300 if you have individual coverage. That is a lot more money to help cover qualified medical expenses.
What are qualified medical expenses? Qualified medical expenses are generally expenses incurred when dealing with a medical diagnosis, treatment, or preventive care. When you withdraw funds from your health savings account to pay for qualified medical expenses, the withdrawal is tax-free — the money you use for the expenses is not considered taxable income.
Generally, for purposes of your HSA, qualified medical expenses typically include payments for doctor visits and hospital visits and stays, prescription medications, dental and vision care, mental health services, preventive care, and some medical equipment and supplies.
HDHP requirements for 2024
Keep in mind that to be eligible to contribute to an HSA, you have to be enrolled in an HDHP.
- For 2024 tax purposes, an HDHP is a health plan with an annual deductible of at least $1,600 for single coverage or not lower than $3,200 for family coverage.
- The annual out-of-pocket expenses cannot exceed $8,050 for self-only coverage or $16,100 for family coverage.
How an HSA works: Tax benefits of an HSA
You can open an HSA when you are enrolled in an HDHP.
- Sometimes your employer will designate which health plans they offer that qualify as high deductible health plans.
- Your contributions are made with pre-tax dollars, and some employers contribute to your HSA on your behalf in addition to your contributions.
- You usually receive a debit card for your HSA account, making it easier to pay out-of-pocket medical expenses.
A key tax benefit of an HSA is that your contributions are tax-deductible, so you can potentially reduce your taxable income by the amount you contribute.
Additionally, you can invest the money once you reach a certain amount in your HSA. It grows tax-free because the interest and gain you earn are tax-free, as are withdrawals made for qualified medical expenses. That’s why it’s often said that HSAs have a triple tax benefit.
Do HSA funds expire?
An HSA provides a convenient way to pay for medical expenses. And your health savings account belongs to you, so it’s portable. That means the account and the money in it are yours — even if you change jobs.
And no, your HSA funds do not expire. The money you put into your health savings account stays there until you spend or invest it.
HSA limits 2025?
The IRS recently announced the HSA contribution limits for 2025.
While the 2025 HSA contribution limit increases are not as significant as for 2024, they still offer an opportunity to work on your retirement savings strategy and potentially reduce your tax burden.
For more information see HSA Contribution Limits Rising Again.
