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IRS Announces 2025 HSA, HDHP Limits

exterior picture of the IRS building

Employees will be able to sock away more money in their health savings accounts (HSAs) next year, thanks to rising inflation.

The annual limit on HSA contributions for self-only coverage in 2025 will be $4,300, a 3.6 percent increase from the $4,150 limit in 2024, the IRS announced May 9. For family coverage, the HSA contribution limit will jump to $8,550, up 3 percent from $8,300 in 2024.

The jump in the contribution limits is significantly less than the roughly 7 percent increase seen from 2023 to 2024.

The IRS did not yet release the 2025 catch-up contribution for savers age 55 and older. It currently stands at $1,000 for 2024, unchanged from 2023.

Meanwhile, for 2025, a high-deductible health plan (HDHP) must have a deductible of at least $1,650 for self-only coverage, up from $1,600 in 2024, or $3,300 for family coverage, up from $3,200, the IRS noted. Annual out-of-pocket expense maximums (deductibles, co-payments and other amounts, but not premiums) cannot exceed $8,300 for self-only coverage in 2025, up from $8,050 in 2024, or $16,600 for family coverage, up from $16,100.

The IRS also announced that the excepted-benefit HRA limit will be $2,150 in 2025, up from $2,100.

Many industry experts tout HSAs as a smart way for employees to save for medical expenses, even in retirement, citing their triple tax benefits: Contributions are made pretax, the money in the accounts grows tax free and withdrawals for qualified medical expenses are tax free.

The increased annual limits from the IRS come as HSA enrollment continues to grow, and as more employers offer contributions to employees' accounts. HSA assets hit a record in 2023, surging to $123.3 billion last year, up nearly 19 percent from the previous record of $104 billion in 2022, according to an annual report by Devenir Group, an HSA research firm and investment consultant firm.

Jon Robb, senior vice president of research and technology at Devenir, said that growth of HSA assets “project a strong, upward trajectory for the future, indicating a steady and significant expansion of the HSA market.”

SHRM’s 2023 Employee Benefits Survey found that 64 percent of employer respondents offer a high-deductible health plan that is linked with a savings or spending account, like an HSA. That is the second most common type of health plan offered, behind a preferred provider organization plan, offered by 82 percent of employers. Among employers that do offer HSAs, 63 percent offer contributions to their employees’ accounts. The average individual-only annual contribution is $1,012, according to SHRM, while the average family annual contribution is $1,585.

Another recent report from the Employee Benefit Research Institute found that employer involvement in HSAs has a positive effect on employee’s account success. HSA holders who received employer contributions had higher balances and were more likely to invest.

HSA annual limits are released every April or May by the IRS—ahead of other limits such as flexible spending accounts and 401(k) contributions— giving employers and HSA administrators plenty of time to adjust their systems. Employers often promote HSAs and encourage employees to boost their contributions during open enrollment, though it would be a good idea for HR and benefits leaders to start that conversation now.


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