Maximizing the Benefits of HSAs: What You Need to Know for 2025

In 2025, the contribution limit for savers with family coverage will increase to $8,550 from $8,300 in 2024. The IRS will also release the catch-up contribution for those age 55 and older later this year, which is currently set at $1,000 for 2024, unchanged from 2023. To make HSA contributions, you must have an eligible high-deductible health insurance plan. According to the IRS, a “high-deductible” plan means having at least $1,650 for self-only plans or $3,300 for family coverage in 2025.

HSAs offer three significant tax benefits: an upfront deduction for contributions, tax-free growth on investments, and no taxes on withdrawals used for qualified medical expenses. However, a recent survey by 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. Therefore, it’s crucial to make informed decisions when managing HSA funds to maximize their benefits.