Is There a Catch-Up Contribution for HSA?

A Health Savings Account (HSA) is a tax-advantaged savings and investment account designed for healthcare expenses. To be eligible, an individual must be covered by a High Deductible Health Plan (HDHP). For those nearing retirement, it is possible to make “catch-up” contributions to an HSA, offering additional savings opportunities.

HSA Catch-Up Contribution Eligibility

Eligibility for HSA catch-up contributions centers primarily on age. An individual must be age 55 or older by the end of the tax year to qualify for this additional contribution. Beyond the age requirement, other HSA eligibility conditions remain. The individual must continue to be covered by an HDHP and cannot be enrolled in Medicare. If both spouses in a family HDHP plan are age 55 or older, each spouse can make a separate catch-up contribution to their respective HSA, provided they each have an HSA.

HSA Contribution Limits

The Internal Revenue Service (IRS) sets annual contribution limits for HSAs, which include both regular and catch-up amounts. For the 2025 tax year, the regular HSA contribution limit is $4,300 for individuals with self-only HDHP coverage. For those with family HDHP coverage, the limit is $8,550.

The catch-up contribution allows eligible individuals to contribute an additional $1,000 annually on top of these regular limits. This means an individual age 55 or older with self-only coverage could contribute up to $5,300, while someone with family coverage could contribute up to $9,550, assuming they meet all eligibility criteria. These limits are subject to change annually based on IRS adjustments.

How to Make HSA Contributions

Making HSA contributions, including catch-up amounts, can be done through several methods. Many individuals contribute through payroll deductions if their employer offers this option, which is pre-tax and reduces taxable income directly. These contributions are typically managed by the employer’s benefits department.

Alternatively, individuals can make direct contributions to their HSA custodian, such as a bank or brokerage firm. These direct contributions are generally tax-deductible when filing income taxes. All contributions for a given tax year, including catch-up amounts, can be made up until the tax filing deadline of the following year, typically April 15.

Tax Advantages of HSA Contributions

HSA contributions offer a unique “triple tax advantage” that makes them a valuable financial tool. First, contributions made to an HSA are tax-deductible, or if made through payroll, they are pre-tax, meaning they reduce your taxable income. This immediate tax benefit can lower your overall tax liability for the year.

Second, any earnings on the funds within an HSA grow tax-free. This includes interest, dividends, and investment gains, allowing the account balance to compound more effectively over time without being eroded by annual taxes. Third, qualified withdrawals for eligible medical expenses are entirely tax-free. This combination of upfront deductions, tax-free growth, and tax-free withdrawals for healthcare costs positions HSAs as an effective strategy for managing medical expenses and supplementing retirement savings.