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HSA Contribution Limits 2024

The average couple retiring today at the age of 65 will need close to a whopping $300,000 to cover health care and medical expenses in retirement, according to an estimate by Fidelity, assuming lifespans of 87 (male) and 89 (female).

A Health Savings Account, or HSA, is a unique, tax-advantaged account that can be used to pay for current or future healthcare expenses.

If you are enrolled in a high-deductible health insurance plan (HDHP) you can qualify for an HSA. These plans are re-visited each year by the IRS, which determines the minimum deductible they must have and the maximum amount a plan-holder can spend out-of-pocket.

While the plan intends to accumulate savings for medical expenses, the savings can be used for general expenses after the age of 65 making it an attractive retirement savings option especially since there are no income limitations unlike an IRA or a Roth IRA.

HSA Contribution Limits for 2024:

HSA allows you to set aside funds for future medical expenses.

Annual contribution limits: For the calendar year 2024, the annual limit for HSA savings for an individual with self-coverage is $4,150 and for an individual with family coverage it is $8,300.

These amounts are approximately 7% higher than the HSA contribution limits for 2023.

Catch-up contribution limits for taxpayers 55 and older remain unchanged at $1,000.

There are no rollover limits for HSA contributions. Any amount left over at the end of the year will automatically roll over into the next.

High deductible health plan: For calendar year 2024, an HDHP is defined as a health plan with an annual deductible that is not less than $1,400 for self-coverage or $2,800 for family coverage.

The annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) also should not exceed $6,900 for self-coverage or $13,800 for family coverage.

HSA Plans in Numbers

Contribution Limits201820192020
Individual$3,450$3,500$3,550
Family$6,900$7,000$7,100
55+ Catch-Up$1,000$1,000$1,000
Minimum Deductible
Individual$1,350$1,350$1,400
Family$2,700$2,700$2,700
Maximum Out of Pocket
Individual$6,650$6,750$6,900
Family$13,300$13,500$13,800

HSA offers Multiple Tax Benefits:

  1. Contributions are tax-deductible: Similar to a 401(k), one can contribute pre-tax dollars to a HSA, which reduces your taxable income for the year.
  2. Earnings grow tax-free: Another benefit of HSAs is that the contributions can be invested in mutual funds, stocks, and other investment tools. Various companies can help you do this, depending on your investing preferences.
  3. You can withdraw money tax-free: If it’s used for qualified medical expenses. You can find a list of these expenses on the IRS’s website.
  4. Unlocks after 65: Up until the age of 65 the HSA account can only be used to pay towards medical expenses. After the age of 65, funds can be withdrawn for any purpose without penalty, but may be subject to income tax if not used for IRS-qualified medical expenses.

Your HSA Rolls over Annually

The great thing about an HSA is that it stays with you. So if you get a new job or health plan, you keep your HSA. You can roll the account into your new employer’s plan or leave it alone. Either way, those funds are yours to use for qualified expenses.

What Happens upon the Demise of the HSA Holder

One should choose a beneficiary when setting up an HSA. What happens to that HSA when you die depends on who is designated as the beneficiary.

Spouse is the designated beneficiary. If your spouse is the designated beneficiary of the HSA, it will be treated as your spouse’s HSA after your death.
Spouse isn’t the designated beneficiary. If your spouse isn’t the designated beneficiary of your HSA:
The account stops being an HSA, and the fair market value of the HSA becomes taxable to the beneficiary in the year in which you die.

If your estate is the beneficiary, the value is included on your final income tax return. The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death.

FSA limit for 2024
If you don’t have a high-deductible health plan, opening an FSA may be an option. However, unlike health savings accounts, you can only open an FSA if your employer offers one. That means self-employed taxpayers aren’t eligible for FSAs. But if you do have an FSA in 2024, the maximum FSA contribution limit is $3,200.

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