There are different accounts you can use to save money in a tax-advantaged manner. IRAs and 401(k)s are popular retirement savings accounts that offer different tax breaks. A health savings account, or HSA, is another account that’s loaded with tax benefits.
HSAs are a hybrid savings and investment account you can use to cover healthcare expenses. However, it’s important to know how they work and how to manage yours efficiently. With that in mind, here are three things to know about HSAs in 2025.
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1. The requirements have changed
Unfortunately, HSAs aren’t free for all. Your health insurance plan needs to meet certain criteria for you to be eligible to fund an HSA, and these rules can change from one year to the next.
In 2025, you’ll qualify with self-only coverage if your health plan has a minimum deductible of $1,650 and an out-of-pocket maximum of $8,300. If you have family coverage, you’ll qualify if your health plan has a minimum deductible of $3,300 and an out-of-pocket maximum of $16,600.
It’s possible to qualify for an HSA one year and not qualify the next year, so check your coverage carefully. Along these lines, you may be eligible for an HSA this year even if you weren’t in previous years.
2. Funds contributed by your employer count toward your contribution limit
Like IRAs and 401(k) plans, HSAs have annual contribution limits, and any funds contributed to your HSA by your employer count toward these limits. This works differently from 401(k) matches, where funds your employer contributes do not count toward your annual contribution limit.
In 2025, HSAs max out at $4,300 for self-only coverage or $8,550 for family coverage. However, if you’re 55 or older, you can make a $1,000 catch-up contribution that’s added to whichever limit applies to you.
Let’s say you have self-only coverage this year and your employer contributes $2,000 to your HSA. This means the most you can contribute on top of that is $2,300.
3. It’s wise to let your money grow if you can
People commonly confuse HSAs with flexible spending accounts, or FSAs. But the two work very differently.
FSA can’t be invested, and your money generally needs to be used up by the end of your plan year. Otherwise, you risk forfeiting it.
HSA funds, on the other hand, don’t have a deadline for using up a balance. You’re allowed to invest existing HSA funds, and it can be very beneficial to leave that money alone for years and let it grow.
HSA funds are allowed to grow tax-free, the same way investments in a Roth IRA or 401(k) do. If you have an HSA, you may want to pay for near-term healthcare expenses out of pocket if you can afford to while carrying your balance forward into retirement, when you might need the money the most. This also allows you to potentially enjoy many years of tax-free gains.
HSAs may offer more tax breaks than any other account out there, since contributions, gains, and withdrawals are tax-free when used to cover qualifying healthcare expenses. It’s important to become familiar with how these accounts work to get the most benefit out of yours.
