Health savings accounts (HSAs) are tax-advantaged medical savings accounts that can be offered to individuals enrolled in a high-deductible health plan (HDHP). HSA funds can be used to pay for medical expenses covered by the HDHP before meeting the deductible or medical expenses not covered under the HDHP.
Contribution limits
HSA contributions, interest, and amounts distributed for qualified medical expenses are exempt from federal tax income, Social Security/Medicare tax, and most state income taxes. The potential tax savings come with strict rules for the HSA, including annual contribution limits. The 2024 contribution limit is:
- $4,150 for individuals with self-only HDHP coverage and
- $8,300 for individuals with family HDHP coverage.
Individuals aged 55 or older are able to make an additional $1,000 contribution, called the “catch-up” contribution. The minimum deductible for 2024 plan years is:
- $1,600 for self-only HDHP coverage and
- $3,200 for family HDHP coverage.
Benefits of an HSA
In addition to being tax-advantaged, HSAs are attractive due to the fact the employee owns the account and can maintain access even if they switch plans or jobs. Additionally, HSA funds carry over year to year and are not subject to a deadline.
If you have any questions about HSAs, please contact your dedicated Creative Benefits, Inc. team member.