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As inflation continues, the IRS has announced higher health savings account (HSA) contribution limits for 2025. The boosted limits give employees more room to save and invest money for medical expenses tax-free.

2025 HSA Limits Jump Thanks to Inflation

For 2025, the HSA contribution limit for individual coverage will increase by 3.6% to $4,300, up from $4,150 in 2024. The family coverage contribution limit will go up 3% to $8,550 next year, an increase from $8,300.

While it’s welcome news for savers, the 2025 hike is notably smaller than this year’s nearly 7% inflation-fueled boost. Contribution limits have increased steadily in recent years as prices and wages grow.

HSA participation continues to expand across employer-sponsored health plans. Industry research shows account balances reached a record $123.3 billion in 2023, up 19% from the prior year. Experts say rising limits indicate strong and expanding interest in HSAs as a way to save for healthcare.

High-Deductible Health Plan Thresholds Also Climb

To be HSA-eligible, an individual must have a high-deductible health plan (HDHP) with minimum deductible and out-of-pocket maximum amounts. The IRS increased these thresholds for 2025 as well.

The minimum HDHP deductible will increase to $1,650 for individual coverage, up $50 from 2024 levels. For family plans, it will rise by $100 to $3,300 next year.

Additionally, out-of-pocket maximums will reach $8,300 for employee-only coverage and $16,600 for families in 2025. These represent respective $250 and $500 hikes. An exception applies to preventive care in HDHPs, which remains fully covered by insurance with no cost sharing.

For more Employee Benefits resources, contact INSURICA today.

Copyright © 2024 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. 

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