HSA Contribution Limits and Other Requirements

For many people, health savings accounts (HSAs) offer a tax-friendly way to pay medical bills. There's an "above-the-line" deduction available for contributions to an HSA, money put in an HSA by your employer is excluded from gross income, earnings are tax free, and there's no tax on distributions if you use the funds to pay qualified medical expenses. You can also hold on to the account when you're no longer working for your current employer and use it tax-free for medical expenses at a different job or even during retirement. All-in-all, HSAs can be a great tool for covering your health care costs.

But there are a handful of limitations and requirements that you need to know about, and they're adjusted for inflation each year. They apply to the amount you can contribute to an HSA for the year, the minimum deductible for your health insurance plan, and your annual out-of-pocket expenses. If you or your health plan are not in compliance with the restrictions in place for any particular year, then you can say goodbye to the HSA tax savings for that year.

HSA Contribution Limits

Your contributions to an HSA are limited each year. For 2022, you can contribute up to $3,650 if you have self-only coverage or up to $7,300 for family coverage. If you're 55 or older at the end of the year, you can put in an extra $1,000 in "catch up" contributions. However, your contribution limit is reduced by the amount of any contributions made by your employer that are excludable from your income, including amounts contributed to your HSA account through a cafeteria plan. You can contribute to an HSA for 2022 up until your 2022 federal income tax return is due – which will be April 18, 2023. The table below shows how the contribution limits have increased over the past few years (and for 2023 HSAs).

Health Plan Minimum Deductibles

To contribute to an HSA, you must be covered under a high deductible health plan. For 2022, the health plan must have a deductible of at least $1,400 for self-only coverage or $2,800 for family coverage.

The 2022 minimum deductible amounts are the same as the 2021 figures. The following table shows the minimum deductible amounts for the six most recent years (plus for 2023).

Limits on Out-of-Pocket Expenses

The health plan must also have a limit on out-of-pocket medical expenses that you're required to pay. Out-of-pocket expenses include deductibles, copayments and other amounts, but don't include premiums. For 2022, the out-of-pocket limit for self-only coverage is $7,050 or $14,100 for family coverage. According to the IRS, only deductibles and expenses for services within the health plan's network should be used to determine if the limit applies.

As the table below indicates, the health plan out-of-pocket expense limits for HSAs have increased each year from 2017 to 2023 to account for inflation. That includes a $50 jump for self-only coverage and a $100 increase for family coverage from 2021 to 2022 (and even larger increases for 2023).