What Is the HSA Contribution Limit for 2024?

A Health Savings Account (HSA) is a tax-advantaged savings account for individuals with a High-Deductible Health Plan (HDHP). It allows funds to be saved and spent on qualified medical expenses, providing a tax-efficient way to manage healthcare costs.

2024 Contribution Limits

The IRS sets annual HSA contribution limits, which are adjusted yearly. For 2024, individuals with self-only HDHP coverage can contribute up to $4,150. Those with family HDHP coverage can contribute up to $8,300.

An additional “catch-up” contribution of $1,000 is available annually for individuals aged 55 and older. This applies per eligible individual, meaning if both spouses in a family plan are 55 or older, each can contribute the additional $1,000.

These limits encompass all contributions to the HSA, whether by the individual, an employer, or any other person. It is important to monitor total contributions to ensure compliance with these maximums.

HSA Eligibility

To contribute to an HSA, an individual must meet specific IRS criteria. The primary requirement is coverage under a High-Deductible Health Plan (HDHP) on the first day of the month for which contributions are made. Generally, individuals cannot have other non-HDHP health insurance, though exceptions exist for vision, dental, or long-term care insurance.

Individuals must not be enrolled in Medicare or claimed as a dependent on someone else’s tax return. The “last-month rule” allows individuals covered by an HDHP on December 1st to be considered eligible for the entire year, provided they maintain HDHP coverage through a “testing period” ending December 31st of the following year. Failing to meet this requirement can result in contributions being included in income and a 10% additional tax.

Associated HDHP Parameters for 2024

For HSA purposes in 2024, a health plan must meet specific financial thresholds to qualify as an HDHP. The minimum annual deductible is $1,600 for self-only coverage and $3,200 for family coverage.

Maximum annual out-of-pocket expenses, including deductibles, co-payments, and co-insurance (but not premiums), are defined. For 2024, this limit is $8,050 for self-only HDHP coverage and $16,100 for family HDHP coverage. These parameters are distinct from HSA contribution limits but are a prerequisite for establishing and contributing to an HSA.

Handling Excess Contributions

An excess HSA contribution occurs when the total amount contributed for the year exceeds the IRS limit. This includes individual and employer contributions. If not corrected, it is subject to income tax and a 6% excise tax annually.

To avoid penalties, excess contributions and any earnings should be withdrawn by the tax filing deadline, including extensions. If the excess is removed by this deadline, the withdrawn excess contribution is not taxable. However, any earnings generated from the excess that are also withdrawn would be taxable in the year of withdrawal. If excess contributions are not removed by the deadline, the 6% excise tax applies annually until the funds are withdrawn or offset by future contributions.