In 2025, the contribution limit for savers with family coverage will increase to $8,550 from $8,300 in 2024. 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 that make them a popular choice for saving money on healthcare expenses: 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 suggests that many are missing out on potential growth by keeping their savings in cash.
Making informed decisions about managing HSA funds is crucial to maximizing their benefits. It’s important to consider various investment options and strategies to ensure that your HSA balance is working hard for you over time. Consult with a financial advisor or tax professional to learn more about how to make the most of your HSA contributions and achieve your long-term financial goals.