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