New HSA and HRA Limits Help You Save More Money

June 13, 2024
June 13, 2024 Jonathan Nolan

New HSA and HRA Limits Help You Save More Money

With the cost of healthcare rising each year, consumers can use every bit of help they can get. We have good news for those of you utilizing a Health Savings Account (HSA) or Excepted Benefit Health Reimbursement Arrangement (HRA) to offset your health insurance premiums and other out-of-pocket costs: The amount that you can contribute to your account while enjoying certain tax benefits, has been raised this year.

The Internal Revenue Service (IRS) recently released the inflation-adjusted contribution limits for HSAs and the maximum amounts for HRAs for 2025.

Individuals with self-only coverage under a high deductible health plan (HDHP) can contribute up to $4,300 to their HSA in 2025, an increase from $4,150 in 2024. For those with family coverage under an HDHP, the contribution limit will rise to $8,550, compared to $8,300 in 2024. The IRS defines a “high deductible health plan” as a health plan with an annual deductible of at least $1,650 for self-only coverage or $3,300 for family coverage. Additionally, the annual out-of-pocket expenses, which include deductibles and co-payments but exclude premiums, must not exceed $8,300 for self-only coverage or $16,600 for family coverage.

HSAs are funded with pretax dollars, and the IRS contribution limits encompass both employee and employer contributions. Employees aged 55 and older are permitted an additional $1,000 catch-up contribution each year.

Excepted Benefit HRAs allow employers to reimburse employees for additional medical expenses not covered by primary group health plans, such as vision or dental care, coinsurance, and co-payments. These HRAs act as a reserve fund for medical expenses. For 2025, the contribution limit for employers to an employee’s excepted benefit HRA will increase to $2,150, up from $2,100 in 2024.

HSA contribution limits and HDHP deductibles are tied to the Consumer Price Index (CPI), so higher contribution limits are usually expected during times of inflation. These adjustments aim to address inflation and ensure employees have adequate resources to cover their healthcare costs.

For more details on these benefits or other group healthcare arrangements, reach out to our experienced health insurance brokers. We can assist your company in selecting the best options for your employees, fostering a healthier and more satisfied workforce.

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