ASK A FINANCIAL PLANNER
The IRS recently released the 2025 contribution limits for health savings accounts (HSAs), as well as the 2025 minimum deductible and maximum out-of-pocket amounts for high-deductible health plans (HDHPs).
What is an HSA?
An HSA is a tax-advantaged account that enables you to save money to cover health-care and medical costs that your insurance doesn’t pay. The funds contributed are made with pre-tax dollars if you contribute via payroll deduction or are tax deductible if you make them yourself using after-tax dollars. Withdrawals used to pay qualified medical expenses are free from federal income tax.
You can establish and contribute to an HSA only if you are enrolled in an HDHP, which offers “catastrophic” health coverage and pays benefits only after you’ve satisfied a high annual deductible. Typically, you will pay much lower premiums with an HDHP than you would with a traditional health plan such as an HMO or PPO.
If HSA withdrawals are not used to pay qualified medical expenses, they are subject to ordinary income tax and a 20% penalty. When you reach age 65, you can withdraw money from your HSA for any purpose; such a withdrawal would be subject to income tax if not used for qualified medical expenses, but not the 20% penalty.
HSA contributions, earnings, and withdrawals may or may not be subject to state taxes; most states with an income tax follow the federal tax rules for HSAs.
What’s Changed for 2025?
Here are the updated key tax numbers relating to HSAs for 2024 and 2025:
SELF-ONLY COVERAGE
- Annual contribution limit: $4,300 (up from $4,150 in 2024)
- Annual deductible minimum: $1,650 (up from $1,600 in 2024)
- Annual out-of-pocket expenses required to be paid (other than for premiums) can’t exceed: $8,300 (up from $8,050 in 2024)
- Annual catch-up contribution limit for individuals aged 55 or over: $1,000 (same as 2024)
FAMILY COVERAGE
- Annual contribution limit: $8,550 (up from $8,300 in 2024)
- Annual deductible minimum: $3,300 (up from $3,200 in 2024)
- Annual out-of-pocket expenses required to be paid (other than for premiums) can’t exceed: $16,600 (up from $16,100 in 2024)
- Annual catch-up contribution limit for individuals aged 55 or over: $1,000 (same as 2024)
SESLOC members have access to a knowledgeable CFS* Financial Advisor, located at SESLOC Wealth Management »
Prepared by Broadridge Investor Communication Solutions, Copyright 2024.
SESLOC Wealth Management is provided through our relationship with CUSO Financial Services, L.P. (CFS)* an Independent Broker-Dealer and SEC Registered Advisor formed for the express purpose of serving Credit Union member’ investment and financial planning needs.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including potential loss of principal. Investment Representatives are registered through CFS. SESLOC has contracted with CFS to make non-deposit investment products and services available to credit union members. CFS and its representatives do not provide tax advice. For specific tax advice, please consult a qualified tax professional.
