The IRS recently announced the 2025 contribution limits individuals with high-deductible health plans (HDHPs) may contribute to their workplace health savings accounts (HSAs) to help pay for rising healthcare expenses.
HSAs are triple-tax-advantaged accounts that eligible workers may fund with pre-tax dollars and withdraw tax-free when used to cover a broad range of qualifying healthcare expenses. Contributions to these accounts are excluded from owners’ taxable income and invested to yield tax-free growth. Moreover, any unused balance at the end of a year may be rolled to the following year, allowing participants to build a significant healthcare savings account for today and into the future.
To qualify as an HDHP, the annual deductible plan participants must pay out-of-pocket in 2025 before insurance kicks in is between $1,650 and $8,300 for self-coverage. For family coverage, the minimum deductible is $3,300, with a maximum of $16,600 in out-of-pocket costs. Additionally, taxpayers may qualify to participate in an HSA when they lack other health coverage (subject to exceptions) and are neither enrolled in Medicare nor claimed as dependents on someone else’s income tax return.
For 2025, the maximum amount an individual may contribute to an HSA is $4,300, up from $4,150 in 2024. family coverage, the maximum contribution is $8,550, up from $8,300 in 2024. Participants aged 55 and older may contribute an additional $1,000 to their HSAs, regardless of whether they have individual or family coverage. This amount does not change from year to year with inflation. Still, individuals should note that the age at which they may qualify for these catch-up contributions is five years older than the age at which they may make catch-up contributions to their 401(k) and IRA retirement accounts.
HSAs can play a critical role in retirement planning, helping individuals cover the costs of Medicare premiums or the tax-qualified costs of a long-term care insurance policy. While withdrawals for non-medical expenses before age 65 incur federal and state taxes and a 20 percent penalty, those taken at age 65 and beyond escape penalties. Moreover, individuals may pass their HSAs to surviving spouses, who can also enjoy all the tax benefits that come with them.
About the Author: Lee F. Hediger is a co-founding director with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs and a registered representative with PWA Securities, LLC. He can be reached at the firm’s Fort Lauderdale, Fla., office at (954) 712-8888 or info@provwealth.com.
Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., 19th Floor, Ft. Lauderdale, FL 33301Â (954) 712-8888.
 Lee F. Hediger is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.
This material is being provided for information purposes only and is not a complete description or a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the preceding material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.
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Posted on September 17, 2024