Get tax-advantaged savings, plus tax-free withdrawals for qualified medical expenses.
With an HSA, you can pay for your current health expenses and save for future qualified health expenses on a tax-free basis. You must be covered by a high deductible health plan (HDHP) to take advantage of an HSA. Because an HDHP generally costs less than traditional health care coverage, the money you save on insurance can be put into the HSA to help contribute to future medical expenses.
How much can I contribute?
Self-Only Contribution Limit for 2024
- Standard Limit: $4,150
- Catch-up* Limit: $1,000
Family Contribution Limit for 2024
- Standard Limit: $8,300
- Catch-up* Limit: $1,000
Self-Only Contribution Limit for 2025
- Standard Limit: $4,300
- Catch-up* Limit: $1,000
- Standard Limit: $8,550
- Catch-up* Limit: $1,000
*Catch-up contributions are available for those who have reached age 55 by the end of their taxable year but have not reached age 65.
How Are HSA Distributions Taxed?
Distributions from your HSA used exclusively to pay for qualified medical expenses for yourself, your spouse, or your dependents are excludable from gross income. Any other distributions are includable in your gross income and are subject to an additional 10 percent tax on the amount includable, except in the case of distributions made after your death, your disability, or your attainment of age 65. HSA distributions not rolled over will be taxed as income in the year distributed, unless they are used for qualified medical expenses. HSA custodians/trustees are not required to determine whether HSA distributions are used for qualified medical expenses.
How Do I Claim the Federal Tax Deduction for My HSA Contribution?
After-tax contributions made by you, and by family members on your behalf, which do not exceed the maximum annual contribution amount, are deductible by you when determining your adjusted gross income for your federal income tax return. You cannot deduct employer contributions, and these contributions will not count as wages for federal income tax purposes.
How is an HSA Established?
An HSA is established by you in much the same way that you establish an IRA—with a qualified trustee or custodian.
What are the Federal Tax Benefits of an HSA?
After-tax contributions to an HSA are fully deductible. Earnings and distributions for qualified medical expenses are tax free. Consult with your tax or legal professional for guidance.
What Happens to My HSA in the Event of My Death?
Spouse Beneficiary
If your spouse is the beneficiary of your HSA, the HSA becomes his/her HSA.
Non-Spouse Beneficiary
If your beneficiary is not your spouse, the HSA ceases to be an HSA as of the date of your death and will be included in the beneficiary’s gross income for the year of death.
Who Can Contribute to My HSA?
If you meet the eligibility requirements for an HSA, you, your employer, and your family members may contribute to your HSA whether you are self-employed or unemployed.