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Great news for those enrolled in High-Deductible Health Plans (HDHPs)! The IRS has increased the contribution limits for Health Savings Accounts (HSAs) in 2024. This means you can put more money into this powerful tax-advantaged account to cover qualified medical expenses and save for future healthcare needs.
Whether you're a seasoned HSA user or just starting, understanding the contribution limits for 2024 is crucial.
An HDHP, or High-Deductible Health Plan, is a type of health insurance plan with a higher deductible than a traditional plan. This means you'll typically pay more out of pocket for covered medical expenses before your insurance kicks in. However, the trade-off is that HDHPs often come with lower monthly premiums. HSAs are designed to work specifically with HDHPs, allowing you to save money to cover those higher deductibles and other qualified medical expenses.
Great news for HSA users! The IRS has increased the contribution limits for Health Savings Accounts (HSAs) in 2024. This means you can contribute more towards your healthcare expenses and save for the future.
Here's a breakdown of the 2024 HSA contribution limits
Individual Coverage: If you're enrolled in a self-only High-Deductible Health Plan (HDHP), your maximum contribution to your HSA in 2024 is $4,150. This is a significant jump from the 2023 limit of $3,850.
Family Coverage: For those covered under a family HDHP, the combined maximum contribution for you and your spouse in 2024 is $8,300. This represents a nice increase from the 2023 limit of $7,750.
Key Points to Remember:
These contribution limits apply to contributions made throughout 2024, regardless of when you enroll in your HDHP.
The contribution limit is a combined total if you and your spouse are covered under a family HDHP. You'll need to decide how to split the contribution between yourselves.
The IRS sets the HSA contribution limits each year, which are subject to change. For the latest and official information, refer to the IRS website.
Catch-Up Contributions for Those 55 and Over: If you're aged 55 or older in 2024, you're eligible for a special catch-up contribution on top of the regular HSA contribution limits. This allows you to contribute an additional $1,000 to your HSA each year.
There are also some changes to the High-Deductible Health Plan (HDHP), including minimum deductibles and out-of-pocket maximums for 2024.
Minimum Deductible: The minimum deductible is the amount you must pay out of pocket for covered medical expenses before your HDHP insurance starts kicking in. The minimum deductible for Individual HDHPs increased by $100 in 2024, reaching $1,600. Family HDHP minimum deductibles also went up $100 to $3,200 in 2024.
Out-of-Pocket Maximum: The out-of-pocket maximum is the most you will pay for covered medical expenses in a year under your HDHP. Once you reach this limit, the insurance plan will typically cover 100% of your remaining covered medical costs. The Individual HDHP maximum out-of-pocket increased by $550 to $8,050 in 2024. Family HDHP out-of-pocket maximums increased by $1100, reaching $16,100 in 2024.
Important Note: While the contribution limits for HSAs increased, the minimum deductibles and out-of-pocket maximums for HDHPs also increased. This means you'll likely pay more out of pocket before your insurance kicks in, but you can also contribute more to your HSA to offset those costs.
To make it easier and simpler to understand, let's table up the entire change to the 2024 IRS HSA Max Contribution Limits:
Now that you understand the 2024 HSA contribution limits, here are some helpful tips to maximize your contributions and get the most out of your HSA:
Plan and automate: Know the limit, strategize contributions throughout the year, and set up automatic transfers to reach your maximum.
Free Employer Money: Take advantage of any employer contributions to your HSA. It's free savings!
Contribute the Max (if possible): If your budget allows, contribute the maximum to your HSA for significant tax-deductible savings.
Spend Smart, Save for the Future: Use your HSA for qualified medical expenses, but consider investing a portion for long-term healthcare needs.
Triple Tax Benefit: Remember, HSAs offer a powerful advantage: contributions are tax-deductible, earnings grow tax-free, and qualified medical expense withdrawals are tax-free.
By understanding the 2024 HSA contribution limits and following these tips, you can leverage your HSA to its full potential and save significantly on healthcare costs throughout your life. So, take advantage of this powerful savings tool and maximize your HSA contributions today!
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