Advocacy News – May 13, 2024
The Internal Revenue Service (IRS) announced last week inflation adjustments for 2025 health savings accounts (HAS) in connection with high-deductible health plans (HDHP).
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For 2025, a HDHP means “a health plan with an annual deductible that is not less than $1,650 for self-only coverage or $3,300 for family coverage.” This is an increase from $1,600 for self-only coverage and $3,200 for family coverage. A HDHP also must maintain a maximum out-of-pocket limit of $8,300 for self-only and $16,600 for family for 2025.
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The maximum HSA contributions also will increase for 2025. For self-only coverage, an individual can contribute up to $4,300 annually; those with family coverage can contribute up to $8,550 annually. These contribution limits are up from $4,150 and $8,300, respectively.
Why it matters: HDHPs have been gaining steam as an alternative to more traditional health insurance options due to premium affordability. A key component of many HDHPs is an HSA, a pretax savings account that employees and employers can contribute to can help offset the plan’s deductible and copays. HSA dollars have triple tax benefits because contributions are made pretax, the money in the accounts grows tax free and withdrawals for qualified medical expenses are tax free.
What’s next: The IRS’ announcement gives employers time to communicate the change to affected employees and give them the option to boost their HAS contributions during open enrollment.
Go deeper: Read the IRS’ revenue procedure document on this topic.