FSA and HSA Contribution Limits for 2024
Review the 2024 guidelines for health savings and flexible spending accounts to inform your financial strategy for managing healthcare costs effectively.
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are tax-advantaged accounts that help pay for healthcare expenses. Contributions are made on a pre-tax basis, lowering your taxable income. Funds can be withdrawn tax-free for qualified medical costs. This article covers the contribution limits, eligibility rules, and operational details for both HSAs and FSAs.
Health Savings Account (HSA) Limits and Requirements
To contribute to an HSA, an individual must be enrolled in a High-Deductible Health Plan (HDHP). The Internal Revenue Service (IRS) defines HDHP qualifications annually. For 2025, an HDHP must have a minimum deductible of $1,650 for self-only coverage or $3,300 for family coverage.
In addition to the minimum deductible, the plan must have a maximum out-of-pocket spending limit. For 2025, this limit is capped at $8,300 for self-only coverage and $16,600 for family coverage. This cap includes deductibles, copayments, and coinsurance. Confirm with your employer or insurance provider that your plan is HSA-eligible.
For 2025, the maximum contribution for an individual with self-only HDHP coverage is $4,300. For those with family HDHP coverage, the maximum contribution is $8,550. These contributions can be made through payroll deductions or as direct contributions until the tax filing deadline of the following year.
The IRS allows for an additional contribution for individuals age 55 or older. This “catch-up” provision allows them to contribute an extra $1,000 annually to their HSA. The catch-up amount is not subject to inflation adjustments and remains fixed.
Flexible Spending Account (FSA) Limits and Rules
For 2025, an employee can contribute up to $3,300 to a Health FSA through pre-tax payroll deductions. This is a per-employee limit, so a married couple could each contribute the maximum if their respective employers offer an FSA. Unlike HSAs, FSA eligibility is not tied to enrollment in a specific type of health plan.
FSAs have a “use-it-or-lose-it” rule, which requires that all funds be spent on qualified medical expenses by the end of the plan year. Any money left in the account after the deadline is forfeited to the employer.
To soften this rule, employers may offer one of two options. The first is a carryover provision, which allows employees to move up to $660 of their unused funds into the next plan year. The second option is a grace period, giving employees an additional 2.5 months after the plan year ends to use remaining FSA funds.
Some employers offer a Dependent Care FSA (DCFSA) to cover costs like daycare for children under 13 or care for an incapacitated spouse or relative. The contribution limit for a DCFSA is set by statute and is not indexed for inflation. For 2025, the limit remains $5,000 per household or $2,500 for those married and filing separately.
Key Distinctions Between HSA and FSA Accounts
The eligibility requirements for these accounts represent a primary difference. HSA contributions require enrollment in an HDHP, while an employer can offer an FSA to employees regardless of their health insurance plan.
Ownership and portability also differ significantly. HSA funds are employee-owned and remain with the individual if they change jobs. FSA funds are employer-owned, and the balance is generally forfeited if the employee leaves the company.
The treatment of unused funds at year-end is another major contrast. HSA balances roll over indefinitely, allowing the account to grow. FSAs are governed by the use-it-or-lose-it rule, where unused funds are lost unless the employer offers a limited carryover or a grace period.
HSAs offer an investment feature not available with FSAs. Once an HSA balance reaches a certain threshold, the funds can be invested in assets like mutual funds, allowing the account to grow tax-free.
Finally, the accounts have specific interaction rules. An individual generally cannot contribute to an HSA while covered by a general-purpose Health FSA. To work around this, some employers offer a Limited Purpose FSA (LPFSA), which can only be used for qualified dental and vision expenses, allowing an employee to have both accounts.