The IRS has announced the contribution limits for Health Savings Accounts (HSAs) for 2025, with self-only coverage having a limit of $4,300 and family plans being able to contribute up to $8,550. These limits are a reflection of the triple-tax advantage of HSAs for medical expenses. For catch-up contributions, those age 55 and older can deposit an additional $1,000 in 2024. In order to contribute to an HSA, individuals must have an eligible high-deductible health insurance plan with a minimum deductible of $1,650 for self-only plans or $3,300 for family plans in 2025.
While HSAs offer tax benefits such as an upfront deduction for contributions, tax-free growth and no taxes on withdrawals for qualified medical expenses, only 19% of participants invest their balance according to a 2023 survey from the Plan Sponsor Council of America. Many HSA savers miss out on growth opportunities by leaving their savings in cash. A finance expert recommends writing a will as it goes beyond just financial planning.
HSAs are becoming increasingly popular as they allow individuals to save money on healthcare costs while also receiving tax benefits. With the increase in contribution limits and the triple-tax advantage of HSAs, it is clear that these accounts are becoming even more valuable for medical expenses. However, it is important for individuals to understand how to use their HSA effectively in order to maximize its benefits.
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