IRS Announces 2025 HSAHDHP Limits

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

The annual limit on HSA contributions for self-only coverage in 2025 will be $4,300a 3.6 percent increase from the $4,150 limit in 2024the IRS announced May 9. For family coveragethe HSA contribution limit will jump to $8,550up 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 2024unchanged from 2023.

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

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

Many industry experts tout HSAs as a smart way for employees to save for medical expenseseven in retirementciting their triple tax benefits: Contributions are made pretaxthe 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 growand as more employers offer contributions to employees' accounts. HSA assets hit a record in 2023surging to $123.3 billion last yearup nearly 19 percent from the previous record of $104 billion in 2022according to an annual report by Devenir Groupan HSA research firm and investment consultant firm.

Jon Robbsenior vice president of research and technology at Devenirsaid that growth of HSA assets “project a strongupward trajectory for the futureindicating 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 accountlike an HSA. That is the second most common type of health plan offeredbehind a preferred provider organization planoffered by 82 percent of employers. Among employers that do offer HSAs63 percent offer contributions to their employees’ accounts. The average individual-only annual contribution is $1,012according to SHRMwhile 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 enrollmentthough it would be a good idea for HR and benefits leaders to start that conversation now.