How Much Can I Contribute to an HSA?
Understand the annual contribution limits for your Health Savings Account (HSA), including eligibility and how to manage overcontributions.
A Health Savings Account (HSA) offers individuals a way to save for medical expenses while benefiting from tax advantages. This account is designed to be paired with a High Deductible Health Plan (HDHP), allowing funds to grow tax-free and be used for qualified healthcare costs. HSAs provide a financial tool for managing present and future medical needs.
Eligibility Requirements for HSA Contributions
To contribute to an HSA, individuals must meet Internal Revenue Service (IRS) criteria. A primary requirement is being covered under a High Deductible Health Plan (HDHP). For 2025, an HDHP must have a minimum annual deductible of $1,650 for self-only coverage or $3,300 for family coverage.
The plan’s out-of-pocket maximums cannot exceed $8,300 for self-only coverage or $16,600 for family coverage in 2025. Individuals must not be covered by any other health insurance that is not an HDHP, including Medicare. Also, the individual cannot be claimed as a dependent on someone else’s tax return.
Understanding Annual HSA Contribution Limits
The amount an individual can contribute to an HSA each year is set by the IRS and is subject to annual adjustments. For 2025, the maximum contribution limit for individuals with self-only HDHP coverage is $4,300. Those covered under a family HDHP can contribute up to $8,550. These limits apply to all contributions made to the HSA, including those from an employer or other individuals.
Individuals aged 55 and older are permitted to make an additional “catch-up” contribution. This allows them to contribute an extra $1,000 beyond the standard limit for their coverage type. For instance, a 58-year-old with self-only coverage could contribute $5,300 for the year ($4,300 standard plus $1,000 catch-up).
Contribution limits are prorated if an individual is only eligible for part of the year. For example, if eligibility begins mid-year, the maximum contribution is calculated by taking one-twelfth of the annual limit for each month of eligibility. A “last-month rule” allows individuals eligible on December 1st to contribute the full annual amount, provided they remain eligible through the end of the following year. The IRS regularly updates these limits for inflation.
Addressing Excess HSA Contributions
Contributing more than the allowed annual limit to an HSA results in an “excess contribution.” This amount is not tax-deductible. Excess contributions are subject to a 6% excise tax for each year they remain in the account. This penalty applies not only to the excess amount but also to any earnings generated by that excess.
To avoid this excise tax, individuals must take corrective action by the tax filing deadline, including any extensions. The process involves removing the excess contribution along with any income attributable to it from the HSA. The removed earnings must then be included as taxable income for the year.
Account holders should monitor their contributions throughout the year to prevent exceeding the limits. If an excess contribution occurs, contact with the HSA administrator is required to initiate the removal process. This ensures compliance with IRS regulations and avoids unnecessary tax implications.