Health savings accounts (HSAs) offer a tax-advantaged way to save money to pay for certain medical expenses. Your HSA contributions are tax-deductible, so they potentially help reduce your taxable income. But contributions to your health savings account are limited each year by the IRS, so the amount you can contribute depends on whether you have single or family coverage and if you are over age 55.
With that in mind, the IRS released the HSA maximum contribution amounts for 2024, and they are higher than ever. How much will you be able to contribute to your health savings account this year? Read on.
HSA annual contribution limit 2024
For 2024, individuals under a high deductible health plan (HDHP) have an HSA annual contribution limit of $4,150. The HSA contribution limit for family coverage is $8,300. Those amounts are about a 7% increase over what you could contribute last year.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you are 55 or older, the catch-up contribution has been $1,000. That still applies for 2024. You can see the difference between the 2023 and 2024 HSA maximum contribution amounts in the chart below.
Contribution Limits for Health Savings Accounts Under HDHPs
(*Individual means self-only coverage.)
| Header Cell - Column 0 | 2024 | 2023 | Change |
|---|---|---|---|
| HSA Contribution Limit | Individual: $4,150 | Individual: $3,850 | Individual: +$300 |
| Row 1 - Cell 0 | Family: $8,300 | Family: $7,750 | Family: +$550 |
| HSA Catch-Up Contribution | $1,000 | $1,000 | No Change |
| HDHP Minimum Deductible | Individual: $1,600 | Individual: $1,500 | Individual +$100 |
| Row 4 - Cell 0 | Family: $3,200 | Family: $3,000 | Family: +$200 |
| HDHP Max Out-of-Pocket | Individual: $8,050 | Individual: $7,500 | Individual: $+550 |
| Row 6 - Cell 0 | Family: $16,100 | Family: $15,000 | Family: $+1,100 |
The 2024 HSA contribution limits represent an increase from last year's amounts of $550 for family coverage and a jump of $300 if you have individual coverage. That is a lot more money to help cover qualified medical expenses.
What are qualified medical expenses? Qualified medical expenses are generally expenses incurred when dealing with a medical diagnosis, treatment, or preventive care. When you withdraw funds from your health savings account to pay for qualified medical expenses, the withdrawal is tax-free — the money you use for the expenses is not considered taxable income.
Generally, for purposes of your HSA, qualified medical expenses typically include payments for doctor visits and hospital visits and stays, prescription medications, dental and vision care, mental health services, preventive care, and some medical equipment and supplies.
What is a High Deductible Health Plan (HDHP)?
Keep in mind that to be eligible to contribute to an HSA, you have to be enrolled in an HDHP.
- For 2024 tax purposes, an HDHP is a health plan with an annual deductible of at least $1,600 for single coverage or not lower than $3,200 for family coverage.
- The annual out-of-pocket expenses cannot exceed $8,050 for self-only coverage or $16,100 for family coverage.
How an HSA works: Benefits of an HSA
You can open an HSA when you are enrolled in an HDHP. Sometimes your employer will designate which health plans they offer that qualify as high deductible health plans. Your contributions are made with pre-tax dollars, and some employers contribute to your HSA on your behalf in addition to your contributions. You usually receive a debit card for your HSA account, making it easier to pay out-of-pocket medical expenses.
A key tax benefit of an HSA is that your contributions are tax-deductible, so you can potentially reduce your taxable income by the amount that you contribute.
Additionally, once you reach a certain amount in your HSA, you can invest the money. It grows tax-free because the interest and/or gain you earn is tax-free, as are withdrawals made for qualified medical expenses. That’s why it’s often said that HSAs have a triple tax benefit.
Do HSA funds expire?
An HSA provides a convenient way to pay for medical expenses. And your health savings account belongs to you, so it’s portable. That means the account and the money in it are yours — even if you change jobs.
And no, your HSA funds do not expire. The money you put into your health savings account stays there until you spend or in some cases, invest it.
Related Content
-
Charitable Remainder Trust: The Stretch IRA AlternativeThe SECURE Act killed the stretch IRA, but a properly constructed charitable remainder trust can deliver similar benefits, with some caveats.
-
Three Ways to Take Control of Your Money During Financial Literacy MonthBudgeting, building an emergency fund and taking advantage of a multitude of workplace benefits can get you on track and keep you there.
-
A Bunch of IRS Tax Deductions and Credits You Need to KnowTax Breaks Lowering your taxable income is the key to paying less to the IRS. Several federal tax credits and deductions can help.
-
Don’t Miss This $2,500 Tax Break for Paying Your Student LoanTax Deductions Do you qualify for the student loan interest deduction this year?
-
Six Tax Breaks That Get Better With AgeTax Breaks Depending on your age, several tax credits, deductions, and amounts change — sometimes for the better.
-
Biden Proposes New Homebuyer Tax CreditsTax Credits President Biden is calling for new middle-class tax breaks including a mortgage tax credit.
-
Will Florida Property Tax Be Eliminated?Property Taxes A new proposal is raising questions about revenue generation in the Sunshine State.
-
States That Won't Tax Your EVState Tax Most states impose additional fees on electric vehicles, but these states don’t penalize EV owners, and some also offer other tax incentives.
-
Tax Season is Here: Big IRS Tax Changes to Know Before You FileTax Filing Tax deductions, tax credit amounts, and some tax laws have changed for the 2024 tax filing season.
-
Your Arizona Family Rebate is Taxable: What to KnowState Tax Thousands of Arizona families will need to report income from special child tax relief payments.
