How Much You Can Put Into an HSA Each Year

Annual contribution limits for HSAs in 2024

The amount you can contribute to a Health Savings Account depends on the type of health insurance coverage you have. For 2024, if you have self-only coverage, you can contribute up to $4,150 per year. If you have family coverage, the limit is $8,300 per year. These limits are set by the IRS and change each year — the 2025 limits will be higher, but the IRS has not yet announced them.

Your employer may contribute to your HSA as well. If they do, their contributions count toward your annual limit. For example, if your employer puts $2,000 into your HSA and you contribute $2,000 yourself with self-only coverage, you have reached the $4,150 limit and cannot add more that year.

If you turn 55 during the year, you can make an additional catch-up contribution of $1,000 for that year only. This extra $1,000 applies whether you have self-only or family coverage. You can continue making this $1,000 catch-up contribution each year after you turn 55, as long as you remain enrolled in an HSA-may be able to access health plan.

Key Takeaways

• Self-only HSA coverage allows $4,150 in contributions for 2024, and family coverage allows $8,300, with limits rising each year.
• Contributions from your employer, your own payroll deductions, and money you deposit yourself all count toward the same annual limit.
• Once you turn 55, you can add an extra $1,000 per year on top of the standard limit as a catch-up contribution.
• If you enroll in an HSA-may be able to access plan partway through the year, you can still contribute the full annual amount for that year.

How employer contributions affect your limit

When your employer deposits money into your HSA, that amount reduces how much you can contribute yourself. The IRS treats all money going into the account the same way — it does not matter whether it came from your paycheck, your employer's contribution, or a deposit you made directly.

If your employer contributes $3,000 and you have self-only coverage, you can only add $1,150 more yourself ($4,150 total limit minus $3,000 employer contribution). Many employers tell employees their contribution amount at the start of the year so you know how much room you have left.

Some employers offer a choice: they may let you decide whether to receive the contribution as HSA funding or as higher wages instead. If you choose the wages, that money does not count toward your HSA limit, and you can contribute the full amount yourself. Check with your employer's benefits office about whether this option is available to you.

Contributing through payroll deduction versus lump sum

You can contribute to your HSA in two main ways: through payroll deduction or by depositing money directly. Payroll deduction means your employer takes the contribution from your paycheck before taxes are calculated, which saves you money on federal income tax and Social Security tax. Direct deposits do not get this tax break unless you are self-employed.

The annual limit is the same either way — $4,150 or $8,300 depending on your coverage type. Some people use both methods in the same year. For example, you might contribute $200 per month through payroll ($2,400 total) and then deposit $1,750 directly before the tax important date, reaching the $4,150 limit.

If you make a direct deposit, you can do so until the tax filing important date of the following year (usually April 15). Money deposited after that date counts toward the next year's limit. Your HSA provider will send you a form showing how much you contributed each year, which you report on your tax return.

What happens if you contribute too much

If you put more money into your HSA than the annual limit allows, the IRS charges a 6 percent excise tax on the excess amount each year it stays in the account. For example, if you contributed $5,000 with self-only coverage (limit $4,150), the $850 excess is taxed at 6 percent, or $51, in the first year. If you do not remove it, you owe another $51 the next year.

To fix an overcontribution, you must withdraw the excess amount plus any earnings it made. If the excess earned $50 in interest, you withdraw $900 total ($850 excess plus $50 earnings). The earnings are taxable as income in the year you withdraw them, but the excess itself is not taxed again.

The important date to correct an overcontribution is usually the tax filing important date of the year after you made the mistake. Contact your HSA provider as soon as you realize the error — they can help you calculate the exact amount to withdraw and file the necessary paperwork with the IRS.

Mid-year changes to your coverage

If you enroll in an HSA-may be able to access plan partway through the year, you can still contribute the full annual limit for that year. The IRS allows this under the last-month rule. For example, if you enroll in an HSA plan on July 1, you can contribute the full $4,150 (or $8,300 for family coverage) for that year, even though you only had coverage for six months.

The catch: you must remain enrolled in an HSA-may be able to access plan through December 31 of the following year. If you drop the coverage before then, you must pay back the excess contributions plus a 20 percent penalty on the earnings. This rule prevents people from using the last-month rule to fund an HSA and then when ready switching to a non-HSA plan.

If you lose HSA-may be able to access coverage during the year and do not re-enroll, you can only contribute a prorated amount. For example, if you had coverage for six months, you can contribute half the annual limit. Calculate this by dividing the annual limit by 12 and multiplying by the number of months you had coverage.

Contribution limits for self-employed people

If you are self-employed and have an HSA-may be able to access high-deductible health plan, you can contribute the same annual amounts as employees: $4,150 for self-only coverage or $8,300 for family coverage in 2024. You can also make catch-up contributions of $1,000 per year once you turn 55.

Self-employed people can deduct HSA contributions on their tax return, which reduces their taxable income. You report the contribution on Form 1040 as an adjustment to income, not as an itemized deduction. This means you get the tax benefit whether you itemize or take the standard deduction.

If you have employees, you can contribute to their HSAs as well. Employer contributions to employee HSAs are not taxable income to the employee and do not count toward the employee's annual limit — only toward your business's deduction. Contributions to your own HSA as a self-employed person do count toward your personal limit.

Frequently Asked Questions

Can I contribute to an HSA if I am covered by Medicare?

No. Once you enroll in Medicare, you are no longer may be able to access to contribute to an HSA, even if you also have other health coverage. You can still withdraw money from your HSA for may have access to medical expenses, but you cannot add new contributions. If you contribute after enrolling in Medicare by mistake, you owe the 6 percent excise tax on the excess.

What if my employer changes their contribution amount mid-year?

Your total contributions for the year still cannot exceed the annual limit. If your employer increases their contribution in July, you must reduce your own contributions for the rest of the year to stay within the limit. Your payroll or benefits office can help you adjust your deduction amount to avoid overcontributing.

Do HSA contributions roll over if I do not use them?

Yes. Unlike a Flexible Spending Account, HSA money does not disappear at the end of the year. You can carry over any unused balance indefinitely and use it in future years. This means you can contribute the maximum amount every year without worrying about losing the money.

Can I contribute to both an HSA and an FSA in the same year?

No. If you are enrolled in a Flexible Spending Account for medical expenses, you cannot contribute to an HSA in the same year. However, you can contribute to an HSA and a Dependent Care FSA at the same time, since they cover different types of expenses. Check with your employer about which combination is available to you.