Health Savings Account (HSA)
What is an HSA?
Health Savings Accounts (HSAs) are tax-advantaged medical savings accounts available to United States taxpayers who are enrolled in a high deductible health plan (HDHP). HSAs are owned by the individual, differentiating them from company-owned health reimbursement arrangements (HRAs) that are an alternate tax-deductible source of funds paired with HDHPs. Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year over year if not spent, with the ability to earn tax-free interest on the account. HSA funds may be used to pay for qualified medical expenses at any time without a federal tax liability.
What is a Qualified High Deductible Health Plan?
A high deductible health plan (HDHP) is a health insurance policy that features higher deductibles and lower premiums than traditional insurance plans. HDHPs can be combined with a health savings account that allows for payment of qualified out of pocket medical expenses on a pre-tax basis.
For 2023, the HDHP required annual deductibles are $1,500 for single coverage and $3,000 for family coverage .
The 2023, the out of pocket maximums are $7,500 for single coverage and $15,000 for family coverage. This includes items such as deductibles, copayments, and coinsurance, but not premiums.
For 2024, the HDHP required annual deductibles are $1,600 for single coverage and $3,200 for family coverage .
The 2024, the out of pocket maximums are $8,050 for single coverage and $16,100 for family coverage. This includes items such as deductibles, copayments, and coinsurance, but not premiums.
How Much Can I Contribute to an HSA?
For 2023, the HSA contribution limits are $3,850 for single coverage and $7,750 for family coverage . There is also a $1,000 catch up contribution allowed for those who are 55 years or older.
2023 IRS Limits
Single Plan Family Plan
Maximum Contribution Limit $ 3,850 $ 7,750
Minimum Deductible $ 1,500 $ 3,000
Maximum Out-of-pocket $ 7,500 $ 15,000
Catch-up Contribution (55+) $ 1,000 $ 1,000
For 2024, the HSA contribution limits are $4,150 for single coverage and $8,300 for family coverage . There is also a $1,000 catch up contribution allowed for those who are 55 years or older.
2024 IRS Limits
Single Plan Family Plan
Maximum Contribution Limit $ 4,150 $ 8,300
Minimum Deductible $ 1,600 $ 3,200
Maximum Out-of-pocket $ 8,050 $ 16,100
Catch-up Contribution (55+) $ 1,000 $ 1,000
What Are Qualified Medical Expenses?
You can pay for a wide range of IRS-qualified medical expenses with your HSA, including many that aren't typically covered by health insurance plans. This includes deductibles, co-insurance, prescriptions, dental and vision care, and more. For a complete list of IRS-qualified medical expenses, visit irs.gov.
Information Sourced From: https://www.irs.gov/pub/irs-irbs/irb19-22.pdf