HSA Contribution Limits, Eligibility, & Considerations

August 28, 2025

Health Savings Accounts (HSAs) are one of the most powerful tools available for managing health care costs while receiving significant tax benefits. Contributions are either pre-tax (if made through payroll deductions) or tax-deductible when you file your return, and withdrawals used for qualified medical expenses are completely tax-free. This triple tax advantage makes HSAs an attractive option for those with access to them. However, there are strict rules surrounding eligibility, contribution limits, and penalties that every account holder should understand.

HSA Contribution Limits and How They Work

The IRS sets annual contribution limits for HSAs, and exceeding them can trigger tax penalties. Contributions include amounts made by you, your employer, or anyone else on your behalf. For 2025, the maximum you can contribute is $4,300 for self-only coverage and $8,550 for family coverage. Individuals age 55 or older who are not yet enrolled in Medicare can make an additional $1,000 “catch-up” contribution.

If your employer contributes to your HSA, that amount counts toward your annual limit. For example, if you have self-only coverage and your employer deposits $1,000 into your HSA in 2025, you can only contribute $3,300 more to stay within the limit.

In 2026, these limits increase slightly to $4,400 for self-only coverage and $8,750 for family coverage, with the $1,000 catch-up provision remaining the same.

Special Rules for Married Couples

Married couples where both spouses are 55 or older and otherwise eligible can each make their own $1,000 catch-up contribution. However, these contributions must be made to separate HSAs—one for each spouse. If your employer doesn’t offer payroll deductions for your spouse’s contributions, you can still make them directly and deduct them on your joint tax return.

Eligibility Requirements for HSAs

Not everyone can contribute to an HSA. To be eligible, you must:

●     Be enrolled in a high-deductible health plan (HDHP) that meets IRS requirements.

●     Not have any other non-HSA-eligible health coverage, including a general-purpose health care flexible spending account (FSA).

●     Not be enrolled in Medicare.

●     Not be claimed as a dependent on someone else’s tax return.

For 2025, an HDHP must have a minimum annual deductible of $1,650 for individual coverage or $3,300 for family coverage, and an out-of-pocket maximum of no more than $8,300 (individual) or $16,600 (family). In 2026, these amounts rise slightly to $1,700/$3,400 deductibles and $8,500/$17,000 maximums.

Timing and Prorated Contributions

HSA contributions for a given year can be made up until the federal tax filing deadline—typically April 15 of the following year. If you were not covered by an HSA-eligible plan for the entire year, you may need to prorate your contributions based on the number of months you were eligible.

However, there’s also the IRS’s “last-month rule”: If you’re enrolled in an HSA-eligible plan as of December 1, you can contribute the full annual maximum for that year—even if you weren’t covered all year. The catch? You must remain eligible for a full “testing period,” lasting from December 1 of that year through December 31 of the following year. If you lose eligibility during that period, you’ll owe taxes and a 10% penalty on any excess contributions.

Tax Penalties to Avoid

While HSAs are incredibly tax-friendly, they also carry potential penalties:

●     Overcontributing: Excess contributions are subject to a 6% excise tax each year they remain in the account. Removing the excess (and any earnings) before the tax filing deadline can help you avoid these penalties.

●     Nonqualified Withdrawals: Using HSA funds for non-medical expenses before age 65 results in income tax plus a 20% penalty. After 65, you can use HSA funds for any purpose without penalty, but withdrawals for non-medical expenses will still be taxed as income.

HSAs vs. FSAs: Can You Have Both?

Some people also have access to health care FSAs, which provide tax savings for medical expenses. While you generally cannot have both a standard FSA and an HSA, you can use a limited-purpose FSA (for dental and vision expenses only) alongside your HSA. In 2025, you can contribute up to $3,300 to a limited-purpose FSA—or $6,600 if both spouses participate through their employers—in addition to your HSA contributions.

Unlike FSAs, HSAs are not subject to “use-it-or-lose-it” rules. Funds roll over year to year and can even be invested, making them a valuable long-term savings vehicle for future medical costs.

Sources:

https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.