The Internal Revenue Service (IRS) has released the updated guidelines for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2025, ensuring individuals and families can plan their health care finances with precision. As health care costs continue to climb, understanding these changes is crucial for maximizing your savings and ensuring adequate coverage. Continue reading to discover what you need to know about the adjustments for the upcoming calendar year.
2025 Health Savings Account (HSA) Limits
For those investing in HSAs, which allow individuals with HDHPs to save money for health care expenses tax-free, there are notable changes to the maximum contribution levels:
- Self-only coverage will increase to $4,300, up from $4,150 the previous year. This adjustment allows individuals to set aside more funds for qualifying medical expenses, enhancing their financial safety net.
- Family coverage contribution limits have also increased to $8,550, allowing families to increase their health-related savings, ensuring broader coverage for medical expenditures.
High Deductible Health Plan (HDHP) Limits
HDHPs have a higher deductible than traditional insurance plans. The monthly premium is typically lower, but you pay more health care costs yourself before the insurance company begins to pay its share (also called your deductible). HDHPs, which are a prerequisite for an HSA, have also seen adjustments in their deductible minimums and out-of-pocket spending limits:
- The minimum deductible for self-only coverage has been set to $1,650; for family coverage, it’s $3,300. This represents the minimum amount one must pay before the insurance plan begins to cover health care costs.
- Maximum out-of-pocket amounts have also been determined, with $8,300 for self-only coverage and $16,600 for family coverage. These caps prevent hefty out-of-pocket health care spending in severe medical scenarios.
Expected Benefit HRAs
In addition to HSA and HDHP adjustments, the IRS has announced a new maximum for excepted benefit health reimbursement arrangements (HRAs) at $2,150 for 2025. HRAs are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year.
Planning Ahead
Effective January 1, 2025, these updates underscore the importance of proactive financial planning for health care. By adjusting your contributions to match the new limits, you can maximize the benefits offered by HSAs and HDHPs. For individuals and families, staying informed and planning accordingly can lead to significant savings and enhanced coverage in the face of rising health care costs.
For employers, providing education and guidance on the best plan is essential. Fortunately, at GMS, a certified professional employer organization (CPEO), we partner with small businesses to take on this administrative burden. GMS represents more than 50,000 employees, which allows us to help small businesses purchase group health insurance for an average of 26% lower employee premiums and 15% lower family premiums than the U.S. average.
We get it; health insurance is complicated. That’s why our benefits experts provide guidance on how to best utilize your plans, maintain compliance, and stay on top of Affordable Care Act (ACA) regulations. Contact our experts today!