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 just 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 next year? Read on.
HSA Max Contributions for 2024
For 2024, individuals under a high deductible health plan (HDHP) will have an HSA contribution limit of $4,150. The HSA contribution limit for family coverage will be $8,300. Those amounts are about a 7% increase over what you can contribute this year for 2023.
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If you are age 55 or older, the catch-up contribution is currently $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 the 2023 amounts of $550 for family coverage and a jump of $300 if you have individual coverage. That’s 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 — i.e., 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.
What Are the HSA Limits for 2023?
Even though the higher 2024 HSA max contribution amounts are good to have in mind for planning purposes, we’re not done with 2023. So, remember that for your HSA for 2023, you can contribute:
- Up to $3,850, if you have self-only coverage.
- If you have family coverage, you can contribute up to $7,750.
- The additional $1,000 catch-up contribution applies if you are 55 or older.
For comparison, those amounts were up $200 for self-only coverage and $250 for family coverage from 2022 amounts, so you can see how the increase from 2023 to 2024 is relatively high.
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. But 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.
Additionally, an HSA provides a convenient way to pay for medical expenses. And your HSA belongs to you, so it’s portable. That means the account, and the money in it, are yours — even if you change jobs.
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