Inflation Enhances the 2025 Amounts for Health Savings Accounts

The IRS has announced inflation adjustments for Health Savings Accounts (HSAs) for 2025. Here are the key changes:

Contribution Limits:

1. Individual Coverage:

2. The annual contribution limit for individuals with self-only coverage under a high-deductible health plan (HDHP) will increase.

3. For 2025, the limit is $4,150, up from $4,150 in 2024.
   

4. Family Coverage:

5. The annual contribution limit for individuals with family coverage under an HDHP will also increase.

6. For 2025, the limit is $8,300, up from $8,300 in 2024.

High-Deductible Health Plan (HDHP) Requirements:

1. Minimum Deductibles:

   1. For self-only coverage, the minimum deductible will remain at $1,600.

   2. For family coverage, the minimum deductible will remain at $3,200.
      

2. Out-of-Pocket Maximums:
   

3. The out-of-pocket maximum for self-only coverage will increase to $8,050.

4. For family coverage, the out-of-pocket maximum will increase to $16,100.

Catch-Up Contributions

Individuals aged 55 or older can contribute an additional $1,000 to their HSA, which remains unchanged.

Heath Reimbursement Arrangements

The IRS also announced an inflation-adjusted amount for Health Reimbursement Arrangements (HRAs). An HRA must receive contributions from an eligible individual (employers can’t contribute). Contributions aren’t included in income, and HRA reimbursements used to pay eligible medical expenses aren’t taxed. In 2025, the maximum amount that may be made newly available for the plan year for an excepted benefit HRA will be $2,150 (up from $2,100 in 2024).

HSAs offer significant benefits for employers and employees. Contributions are pre-tax, grow tax-free, and withdrawals for medical expenses are tax-free. HSAs are portable, staying with the account holder even if they change jobs or leave the workforce. In recent years, employers have found HSAs attractive for attracting and retaining talent.

These adjustments help account for inflation and ensure that the HSA limits keep pace with rising healthcare costs. If you have an HSA or are considering opening one, these updated limits are essential to keep in mind for your 2025 healthcare and financial planning. Contact us for more information about HSAs for your business.