How Much Can I Contribute to My HSA?

A Health Savings Account (HSA) helps manage healthcare expenses and save for future medical needs. Understanding annual HSA contribution limits is important for financial planning. These accounts have specific rules and limits that govern contributions. This article explains the factors that determine your HSA contribution capacity.

HSA Eligibility Requirements

Contributing to an HSA requires meeting specific eligibility criteria. You must be enrolled in 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 maximum, which includes deductibles, co-payments, and coinsurance, cannot exceed $8,300 for self-only coverage or $16,600 for family coverage in 2025.

Other health coverage can affect your eligibility. You are not eligible to contribute if covered by any other non-HDHP health plan, such as Medicare or TRICARE. Coverage under a general-purpose Health Flexible Spending Arrangement (FSA) or Health Reimbursement Arrangement (HRA) also disqualifies you, as these accounts may cover expenses before your HDHP deductible is met. However, limited-purpose FSAs or HRAs, which only cover dental or vision expenses, do not affect HSA eligibility.

Finally, your tax status plays a role in HSA eligibility. You cannot be claimed as a dependent on someone else’s tax return.

Understanding Annual Contribution Limits

The Internal Revenue Service (IRS) sets annual limits on HSA contributions. These limits apply to all contributions made to your HSA, regardless of the source. For 2025, the maximum amount for self-only HDHP coverage is $4,300.

If your HDHP covers your family, the maximum contribution limit for 2025 is $8,550. These amounts are subject to adjustment each year. Individuals aged 55 and older are eligible to make an additional “catch-up” contribution.

This catch-up contribution allows for an extra $1,000 per year. An individual aged 55 or older with self-only coverage could contribute up to $5,300 in 2025, while someone with family coverage could contribute up to $9,550. These limits apply to the total amount contributed across all HSAs an individual may have.

Situations Affecting Your Contribution Limit

Several situations can influence your annual HSA contribution limit. If you are HSA-eligible for only a portion of the year, your contribution limit will be prorated. You can contribute one-twelfth of the annual maximum for each eligible month. For example, if you become eligible on July 1st, you can contribute for six months of the year.

A special rule, known as the “last-month rule,” allows individuals who become HSA-eligible on the first day of the last month of their tax year (December 1st for most people) to contribute the full annual amount. If you use this rule, you must remain HSA-eligible for a “testing period” extending through December 31st of the following year. Failing to maintain eligibility during this testing period requires including the excess contributions in your gross income and may result in an additional tax.

Employer contributions also count towards your annual IRS limit. If your employer contributes to your HSA, that amount reduces the maximum you can personally contribute. For instance, if the family limit is $8,550 and your employer contributes $1,000, you can only contribute an additional $7,550. When both spouses have HSAs under family coverage, they share the family contribution limit and can divide the amount as they choose, but their combined contributions cannot exceed the limit.

Addressing Overcontributions

Contributing more than the allowed limit to your HSA can lead to tax penalties. Any amount contributed in excess of the annual limit is subject to a 6% excise tax. This tax applies to the excess amount for each year it remains in the account until corrected.

To avoid the excise tax, you must remove the excess contribution from your HSA. This removal, along with any earnings attributable to that excess, must occur by the tax filing deadline for the year the overcontribution was made, including any extensions. The earnings on the excess contribution are taxable income in the year they are distributed.

If you discover an overcontribution after the tax filing deadline, it is too late to avoid the 6% excise tax for that year. However, you should still remove the excess amount to prevent the tax from applying in subsequent years. Consulting with a tax professional can help ensure proper correction and minimize potential penalties.